Oppenheimer Principal Protected Main Street Fund II(R)

497 1 pspsai_pp2.htm PSP AND SAI PPII Oppenheimer Principal Protected Main Street Fund II(R)

Oppenheimer
Principal Protected
Main Street Fund II(R)

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Prospectus dated December 15, 2006

Oppenheimer Principal Protected Main
Street Fund II(R)is a mutual fund that
seeks capital preservation in order to
have a net asset value on the Maturity
Date at least equal to your original
investment (reduced by any adjustments
to the Warranty Amount permitted under
the Warranty Agreement and less any
Shares of the Fund cannot be purchased sales charges, your share of
except by the reinvestment of the extraordinary expenses and the
Fund's dividends and distributions. proportional reduction for dividends
paid in cash and redemption of Fund
As with all mutual funds, the shares). The Fund seeks high total
Securities and Exchange Commission has return as a secondary objective. It
not approved or disapproved the Fund's invests in shares of the Oppenheimer
securities nor has it determined that Main Street Fund(R)(which invests
this Prospectus is accurate or mainly in common stocks) and U.S.
complete. It is a criminal offense to government securities, including zero
represent otherwise. coupon bonds.
This Prospectus contains important
information about the Fund's
objective, investment policies,
strategies and risks. It also contains
important information about how to
sell shares of the Fund and other
account features. Please read this
An investment in the Fund is not a Prospectus carefully before you invest
deposit of any bank and is not insured and keep it for future reference about
or guaranteed by the Federal Deposit your account.
Insurance Corporation or any other
government agency or any person.
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The Right Way to Invest

CONTENTS

ABOUT THE FUND

Overview

The Fund's Investment Objective and Principal Investment
Strategies

Main Risks of Investing in the Fund

The Fund's Past Performance

Fees and Expenses of the Fund

About the Fund's Investments

The Warranty Agreement and the Financial Warranty

How is the Warranty Amount Determined?

How the Fund is Managed

ABOUT YOUR ACCOUNT

Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Website
Reinvestment Privilege

How to Sell Shares
By Mail
By Telephone

How to Exchange Shares

Shareholder Account Rules and Policies

Dividends, Capital Gains and Taxes

Financial Highlights of the Fund

Financial Highlights of the Underlying Fund

ABOUT THE FUND

Overview

The Oppenheimer Principal Protected Main Street Fund II is a "fund of
funds" that invests a portion of its assets in shares of Oppenheimer
Main Street Fund(R)and a portion of its assets in U.S. government
securities.

The Fund has an Offering Period, a Warranty Period and a
Post-Warranty Period. Shares of the Fund were offered during an
Offering Period but will not be offered during the Warranty Period,
except in connection with reinvestment of dividends and distributions.
The Offering Period was from November 10, 2003 to February 27, 2004.

The Warranty Period began on March 3, 2004 and will run until
March 3, 2011 (the "Maturity Date"). During the Warranty Period, the
Fund will seek primarily capital preservation, and secondarily high
total return, by allocating its assets between an equity portfolio
(consisting of Class Y shares of Oppenheimer Main Street Fund(R)) and a
debt portfolio (consisting of U.S. government securities, including
zero coupon bonds and certain securities guaranteed by U.S. government
agencies and instrumentalities). Shareholders may receive taxable gains
from portfolio transactions by the Fund, whether they take payment in
cash or reinvest them to purchase additional Fund shares.

The Fund has entered into a Financial Warranty Agreement (the
"Warranty Agreement") with Merrill Lynch Bank USA (the "Warranty
Provider") pursuant to which the Warranty Provider has issued, subject
to certain conditions, a financial warranty (the "Financial Warranty")
to the Fund. The Financial Warranty attempts to make sure that the
value of each shareholder's account on the Maturity Date will be no
less than the value of that shareholder's account on the second
business day after the end of the Offering Period, including net
income, if any, earned by the Fund during the Offering Period, reduced
by (i) sales charges, (ii) the shareholder's pro rata portion of any
Extraordinary Expenses (as described on page 11), (iii) the
proportional reduction for dividends and distributions paid in cash and
redemptions of Fund shares, (iv) the shareholder's pro rata portion of
the value of any shares issued by the Fund during the Warranty Period
other than in connection with the reinvestment of dividends and
distributions, (v) the amount of any increase in that shareholder's
investment in the Fund as a result of changes in accounting practices
for the Fund, corporate actions or certain other events, and (vi) if
OppenheimerFunds, Inc., as manager of the Fund (the "Manager"), is
required to make payments under the Warranty Agreement in certain
instances, and the Manager fails to do so in a timely manner, the
amount of such payments (on a pro rata basis). The value of the
shareholder's account on the second business day after the end of the
Offering period minus the above-described reductions is referred to as
the "Warranty Amount." In order to avoid having their Warranty Amount
reduced, shareholders must reinvest all dividends and distributions
received from the Fund to purchase additional shares of the Fund and
must not redeem any shares of the Fund during the Warranty Period. If
the value of the Fund's assets on the Maturity Date is insufficient to
result in the value of each shareholder's account being at least equal
to the shareholder's Warranty Amount, the Warranty Provider will pay
the Fund an amount sufficient to make sure that each shareholder's
account can be redeemed on the Maturity Date for an amount equal to his
or her Warranty Amount.

Because the front-end sales charge paid on the purchase of Class
A shares reduces the Warranty Amount for Class A shareholders, Class A
shares will have a lower Warranty Amount than the Class B or Class C
shares. Normal operating fees and expenses of the Fund incurred in the
ordinary course of business will not reduce the Warranty Amount.
However, certain Extraordinary Expenses (as described on page 11)
incurred by the Fund will reduce the Warranty Amount. In addition, in
the event the Fund is completely and irreversibly invested in U.S.
government securities and cash and cash equivalents, any Fund expenses
in excess of certain limits (as described on pages 26-27) will reduce
the Warranty Amount.

The Warranty Provider, a wholly-owned subsidiary of Merrill Lynch
& Co., Inc., is licensed as an industrial bank organized under Utah
law. The Warranty Provider's principal business is to engage in banking
activities. The Warranty Provider is regulated and examined by the FDIC
and the Utah Department of Financial Institutions. The Warranty
Provider is not regulated by the Federal Reserve or the U.S. Department
of Treasury. Neither Merrill Lynch & Co., Inc. nor any other entity
will be guaranteeing the obligations of the Warranty Provider. The
Warranty Provider has not participated in the organization of the Fund
and makes no representation regarding the advisability of an investment
in the Fund. Further information about the Warranty Provider can be
found in the Statement of Additional Information.

Shareholders could lose money by investing in this Fund. A
shareholder's Warranty Amount will be reduced, as more fully described
in this Prospectus, if the shareholder takes any dividends or
distributions in cash instead of reinvesting them in additional shares
of the Fund, redeems any shares before the Maturity Date, if the Fund
incurs Extraordinary Expenses (as described on page 11), or if the Fund
or the Manager fails to perform certain obligations under the Warranty
Agreement (in which case the Warranty Provider may have the right to
terminate the Financial Warranty). Moreover, shareholders could lose
money if the Warranty Provider fails or is unable to meet its
obligations under the Warranty Agreement.

During the Post-Warranty Period, which will commence immediately
following the Warranty Period, the Fund will seek high total return by
investing in Class Y shares of Oppenheimer Main Street Fund, common
stocks of U.S. companies of different capitalization ranges, and/or
debt securities, such as bonds and debentures. The Fund's shares will
be offered on a continuous basis during the Post-Warranty Period.

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE DURING THE WARRANTY PERIOD?
During the Warranty Period, the Fund will seek capital preservation in
order to have a net asset value on the Maturity Date at least equal to
the Warranty Amount. The Fund seeks high total return as a secondary
objective. The Fund's investment objectives are fundamental policies
that can be changed only with the approval of a majority of the Fund's
outstanding voting shares, as described in the Statement of Additional
Information.

WHAT DOES THE FUND MAINLY INVEST IN DURING THE WARRANTY PERIOD? The
Fund is a special type of mutual fund known as a "fund of funds"
because it can invest a substantial portion of its assets in other
mutual funds. During the Warranty Period, the Fund's investment
manager, OppenheimerFunds, Inc. (the "Manager"), will allocate the
Fund's assets, consistent with the Warranty Agreement, between a
portfolio of equity securities as described below (the "equity
portfolio") and a portfolio of debt securities as described below (the
"debt portfolio"). The equity portfolio will consist of Class Y shares
of Oppenheimer Main Street Fund(R)(referred to as the "Underlying
Fund"). The Underlying Fund's investment objective is to seek high
total return by investing mainly in common stocks of U.S. companies of
different capitalization ranges. The debt portfolio will principally
consist of zero coupon U.S. government securities, but may also include
certain other securities guaranteed by certain U.S. government agencies
and instrumentalities and securities issued by government sponsored
enterprises which are neither guaranteed nor insured by the U.S.
government. The securities in the debt portfolio will have a maturity
approximately equal to the period remaining in the Warranty Period.

WHO IS THE FUND DESIGNED FOR? The Fund may be an appropriate investment
for you if you:
o Have an investment time horizon of at least 7 years (measured
from the beginning of the Warranty Period)
o Seek potential for growth but are concerned about capital

preservation
o Want a professionally managed and diversified portfolio
o Are not seeking current income through cash dividends

Main Risks of Investing in the Fund

All investments have risks to some degree. The Fund's investments are
subject to changes in their value from a number of factors described
below. There is also the risk that poor security selection by the
Manager, either in its capacity as the Fund's investment manager or in
its capacity as the Underlying Fund's investment manager, will cause
the Fund to underperform other funds having a similar objective.

The principal risks of an investment in the Fund during the
Warranty Period and the Post-Warranty Period are those generally
attributable to investing in stocks and debt securities. Because the
Fund invests in both stocks (indirectly through investment in the
Underlying Fund) and debt securities during the Warranty Period, the
Fund may underperform stock funds when stocks are in favor and
underperform bond funds when debt securities are in favor.

To obtain the benefits of the Financial Warranty, the Fund
expects to comply with certain investment limitations established by
the Warranty Agreement. If the Fund or the Manager chooses not to
comply with those investment limitations because it determines that
such non-compliance would be in the shareholder's best interests, the
Warranty Provider may exercise its rights to have more of the Fund's
assets invested in the debt portfolio (including a complete and
irreversible allocation to the debt portfolio) or could terminate the
Financial Warranty.

As with any mutual fund, the value of the Fund's investments, and
therefore the value of Fund shares, may go down. Although the Fund will
seek to return a shareholder's Warranty Amount at the end of the
Warranty Period, the value of the Fund's shares will fluctuate during
the Warranty Period and may decline below your original account value.
Changes in the value of the Fund's shares may occur because a
particular stock market in which the Underlying Fund invests is rising
or falling or because of the effect of the change on the value of the
Fund's debt portfolio in response to interest rate changes. You could
lose money by investing in the Fund if you redeem your shares prior to
the Maturity Date or if the value of the Fund's investments goes down
and the Warranty Provider is unable to meet its obligations under the
Financial Warranty. See "The Warranty Agreement and the Financial
Warranty" on pages 22-24 for further information about the Warranty
Agreement and the circumstances under which the Financial Warranty may
be terminated.

The Fund will distribute any net gains and income (including
accrued but unpaid income on zero coupon bonds) to shareholders at
least annually. Such distributions are taxable to shareholders even if
the distributions are reinvested in the Fund. Shareholders who reinvest
distributions in the Fund will be required to pay taxes on such
distributions from other sources. Shareholders who do not reinvest
distributions, however, will be subject to a reduction in their
Warranty Amount.

RISKS OF INVESTING IN STOCKS. Stocks fluctuate in price, and their
short-term volatility at times may be great. Because the Underlying
Fund currently invests a substantial portion of its assets in common
stocks, the value of the Underlying Fund's portfolio and therefore the
Fund's equity portfolio will be affected by changes in the stock
markets. Market risk will affect the Fund's net asset values per share,
which will fluctuate as the values of the Underlying Fund's portfolio
securities change. The corresponding effect on the net asset value of
the Fund will depend on the percentage of the Fund's assets allocated
to shares of the Underlying Fund.

A variety of factors can affect the price of a particular stock
and the prices of individual stocks do not all move in the same
direction uniformly or at the same time. Different stock markets may
behave differently from each other. In particular, because the
Underlying Fund currently focuses its stock investments in U.S.
issuers, it will be primarily affected by changes in U.S. stock markets.

Other factors can affect a particular stock's price, such as poor
earnings reports by the issuer, loss of major customers, major
litigation against the issuer, or changes in government regulations
affecting the issuer or its industry. The Underlying Fund currently
invests substantial amounts in large companies, but may buy securities
of small- and medium-size companies, which may have more volatile
prices than stocks of large companies. Therefore, if the Underlying
Fund is focusing on or has substantial investments in smaller
capitalization companies at times of market volatility, the Underlying
Fund's share price may fluctuate more than that of funds focusing on
larger capitalization issuers.

At times, the Underlying Fund's emphasis of its investments in a
particular industry may differ compared to the weighting of that
industry in the Standard and Poor's 500 Composite Stock Price Index
("S&P 500 Index"), which the Underlying Fund uses as a performance
benchmark. To the extent that the Underlying Fund increases its
emphasis on stocks in a particular industry, its share values may
fluctuate in response to events affecting that industry, such as
changes in economic conditions, government regulations, availability of
basic resources or supplies, or other events that affect that industry
more than others.

INTEREST RATE RISK. Debt securities are subject to changes in value
when prevailing interest rates change. When interest rates fall, the
values of already-issued debt securities generally rise. When interest
rates rise, the values of already-issued debt securities generally
fall, and those securities may sell at a discount from their face
amount. The magnitude of these price fluctuations is generally greater
for debt securities having longer maturities and for zero coupon
securities.

The Fund buys zero-coupon or "stripped" securities, which are
particularly sensitive to interest rate changes. Their prices may go up
or down more than the prices of other types of debt securities in
response to interest rate changes.

CREDIT RISK. Credit risk is the risk that the issuer of a debt security
might not make interest and principal payments on the security as they
become due. Securities, including zero-coupon securities, directly
issued by the U.S. Treasury and certain U.S. government agencies that
are backed by the full faith and credit of the U.S. government have
little credit risk. Securities issued by other agencies or
instrumentalities of the U.S. government generally have low credit
risks. Securities issued by government-sponsored enterprises, such as
the Federal Home Loan Mortgage Corporation, the Federal National
Mortgage Association and the Federal Home Loan Bonds, are neither
guaranteed nor insured by the U.S. government and thus may experience
greater credit risk than other types of U.S. government securities.

RISKS ASSOCIATED WITH THE FINANCIAL WARRANTY. Although neither the
Warranty Provider nor any other person (including the Manager, its
affiliates or the United States government) has guaranteed the
performance of the Fund, the Fund has entered into the Warranty
Agreement with the Warranty Provider to try to make sure that on the
Maturity Date shareholders will be able to redeem their shares of the
Fund at their Warranty Amount. The Financial Warranty is solely the
obligation of the Warranty Provider. It is possible that the financial
position of the Warranty Provider may deteriorate and it would be
unable to satisfy its obligations under the Financial Warranty. As
described above, shareholders could lose money if the Warranty Provider
fails to or is unable to perform its obligations under the Warranty
Agreement.

The Fund's assets and the obligations of the Warranty Provider
under the Warranty Agreement are not guaranteed by Merrill Lynch & Co.,
Inc., the United States government, the Manager, or any other entity or
person. The lack of a guarantee of the Warranty Provider's obligations
under the Warranty Agreement presents some risk to shareholders if the
Warranty Provider fails to or is unable to honor its obligations to the
Fund on the Maturity Date under the Warranty Agreement.

The Warranty Agreement may be terminated by the Warranty Provider
in certain circumstances, as discussed in "The Warranty Agreement and
the Financial Warranty," on pages 22-24. In such event, shareholders
will not receive the Warranty Amount but instead will receive the
Fund's then-current net asset value when they redeem their shares,
which may be lower than the Warranty Amount. Shareholders may receive
less than their Warranty Amount in certain other circumstances as well.
For example, the Warranty Agreement requires the Manager to make
payments to the Warranty Provider upon the happening of certain
specified events. If the Manager fails to make a required payment, the
Warranty Provider may reduce its obligations under the Financial
Warranty. As a result, a shareholder's Warranty Amount may be reduced.

In addition, the Manager has contractually agreed to reduce its
management fee for the remainder of the Warranty Period in the event
that the Fund becomes completely and irreversibly invested in the debt
portfolio to the extent necessary so that total annual operating
expenses of the Fund are limited to certain agreed amounts (as
described under "Advisory Fees" on pages 26-27) for each share class
(excluding Extraordinary Expenses and certain other expenses). However,
if this reduction in the management fee is not sufficient to reduce
total annual operating expenses to these limits, the Manager is not
required to subsidize Fund expenses to assure that expenses do not
exceed those limits. Under such circumstances, the aggregate Warranty
Amount will be reduced by the portion of the Fund's annual operating
expenses that exceed these limits.

Furthermore, a shareholder's Warranty Amount per share will be
reduced by the shareholder's proportionate share of any Extraordinary
Expenses incurred by the Fund, by any shortfall amount resulting from
the negligence of the Manager, by dividends and distributions paid in
cash, and by redemption of Fund shares during the Warranty Period. If
any of those were to occur, the shareholder will receive less than the
shareholder's original Warranty Amount on the Maturity Date. The
Manager will not be responsible to the Fund for a reduction in the
Warranty Amount due to an Extraordinary Expense or other shortfall
resulting from the Manager's negligent acts.

INVESTMENT RESTRICTIONS UNDER WARRANTY AGREEMENT. To avoid losing the
benefits of the Financial Warranty, the Fund must satisfy conditions of
the Warranty Agreement that require the Manager to make investment
allocation decisions based on a mathematical formula (the "Warranty
Formula") that limits the amount of the Fund's assets that may be
allocated to the equity portfolio. This limitation is designed to
reduce, but does not eliminate, the risk that the Fund's assets will be
insufficient to allow the Fund to redeem shares at not less than the
Warranty Amount on the Maturity Date. Accordingly, the Warranty
Agreement could limit the Manager's ability to respond to changing
market conditions during the Warranty Period. If the Manager fails to
comply with the agreed-upon investment parameters or otherwise fails to
comply with certain requirements set forth in the Warranty Agreement,
the Warranty Provider may terminate the Financial Warranty, exercise
its right to instruct the Manager to immediately allocate the Fund's
assets to the debt portfolio, deliver to the Fund's custodian (the
"Custodian") pre-signed instructions from the Manager instructing the
Custodian to immediately allocate all of the Fund's assets to the debt
portfolio, or change one of the variables in the Warranty Formula to
increase the portion of the Fund's assets allocated to the debt
portfolio. If the Warranty Provider were to exercise the right to have
all of the Fund's assets invested in the debt portfolio, the Fund's
ability to participate in upward equity market movements would be
eliminated.

RISK OF DEFAULT. A shareholder's ability to receive the Warranty Amount
depends on the financial condition of the Warranty Provider. The
Warranty Agreement is an obligation that runs solely to the Fund, not
to the Fund's shareholders, and shareholders would have no recourse
against the Warranty Provider in the event it defaults on its
obligation to the Fund. Since the Financial Warranty is solely an
obligation of the Warranty Provider, an investment in the Fund involves
a risk of loss if the Warranty Provider is placed in receivership, or
is otherwise unable to perform its obligations or defaults on its
obligations, if any, to the Fund. In the event of an act of insolvency
by the Warranty Provider, the Fund's board of trustees (the "Board")
could take a variety of actions including replacing the Financial
Warranty. However, the Board is under no obligation to replace the
Financial Warranty or otherwise find a substitute provider of principal
protection. In each of the above circumstances, shareholders could
suffer a loss of principal. No entity or person is obligated to make up
any shortfall in the event the Warranty Provider defaults on its
obligations to the Fund and the Fund's assets are insufficient to
redeem the Fund's shares for the Warranty Amount on the Maturity Date.
The Warranty Provider may, under certain conditions, assign its
obligations under the Warranty Agreement to an affiliate, provided the
Warranty Provider's parent company guarantees the obligations of the
affiliate. The Warranty Provider may assign its obligations under the
Warranty Agreement to a non-affiliate only if the Board and the Manager
have consented to such assignment. There is a risk that the substitute
Warranty Provider may not have the financial resources to fulfill its
obligations under the Warranty Agreement.

The availability of the Financial Warranty on the Maturity Date
is conditioned upon the Manager and the Fund satisfying their
respective obligations under the Warranty Agreement. Should the Manager
or the Fund fail to satisfy their respective obligations under the
Warranty Agreement, the Warranty Provider is permitted to terminate the
Financial Warranty and thus terminate its obligations to make any
payment to the Fund if a shortfall exists on the Maturity Date. In
addition, the availability of the Financial Warranty on the Maturity
Date is conditional upon the Manager and the Fund's Custodian providing
certain information to the Warranty Provider. If the Manager or the
Custodian fails to provide such information, the Warranty Provider may
require the Fund to invest exclusively in the debt portfolio, which
will eliminate the Fund's ability to participate in upward equity
market movements.

RISKS ASSOCIATED WITH ASSET ALLOCATION. At times, the Fund's assets may
be largely invested in the debt portfolio in order to increase the
likelihood of preserving the original principal value of the Fund. If
Fund assets are largely invested in the debt portfolio, the Fund's
exposure to equity markets will decrease and the Fund's performance
will be more highly correlated with debt securities. In addition, if
during the Warranty Period the equity markets experience a major
decline, the Fund's assets may become largely or entirely invested in
the debt portfolio. If the value of the shares of the Underlying Fund
were to decline significantly (whether within a short period of time or
over a protracted period), a complete and irreversible reallocation to
the debt portfolio may occur. In this circumstance, the Fund would not
participate in any subsequent recovery in the equity markets.
Investment in debt securities during the Warranty Period reduces the
Fund's ability to participate as fully in upward equity market
movements, and therefore represents some loss of opportunity compared
to a portfolio that invests principally in equity securities. In
addition, the terms of the Warranty Agreement prescribe certain
investment parameters within which the Fund must be managed during the
Warranty Period to preserve the benefit of the Financial Warranty.
Accordingly, the Warranty Agreement could limit the Manager's ability
to alter the allocation of Fund assets during the Warranty Period in
response to changing market conditions. The terms of the Warranty
Agreement could require the Fund to liquidate an equity position when
it otherwise would not be in the shareholders' best interests or at a
time when the Manager otherwise would not recommend that the securities
be sold.

The asset allocation process may result in additional transaction
costs. This process can have an adverse effect on the performance of
the Fund during periods of increased equity market volatility. In
addition, a high portfolio turnover rate may increase the Fund's
transaction costs, which would adversely affect performance. Also, you
may receive taxable gains from portfolio transactions by the Fund,
whether you take payment in cash or reinvest them to purchase
additional Fund shares.

HOW RISKY IS THE FUND OVERALL? The risks described above collectively
form the overall risk profile of the Fund and can affect the value of
the Fund's investments, its investment performance and the prices of
its shares. Particular investments and investment strategies also have
risks. These risks mean that you can lose money by investing in the
Fund, particularly if the financial condition of the Warranty Provider
deteriorates and it is unable to make a payment to the Fund, if
necessary, under the Financial Warranty. You could lose money if, among
other reasons, the Fund incurs Extraordinary Expenses as described on
page 11 or is liquidated prior to the Maturity Date, or if you redeem
your shares prior to the Maturity Date and the Fund's net asset value
is less than the Warranty Amount on the date of redemption. It is
possible that the Warranty Provider will not be able to satisfy its
obligations under the Warranty Agreement as of the Maturity Date or
that the Manager or the Fund will not be able to satisfy their
respective obligations under the Warranty Agreement. As a result, the
Fund may not be able to redeem your shares for the Warranty Amount on
the Maturity Date, and the value of your shares on the Maturity Date
may be more or less than your Warranty Amount. There is no assurance
that the Fund will achieve its investment objective.

------------------------------------------------------------------------
The life of the Fund is divided into three phases: an Offering Period
(which has ended), a Warranty Period and a Post-Warranty Period.
------------------------------------------------------------------------

Warranty Period. The Warranty Period began March 3, 2004, the third
business day after the end of the Offering Period, and will run through
March 3, 2011, or if that day is not a business day, the first business
day thereafter (previously defined as the "Maturity Date"). During the
Warranty Period, the Fund will not accept purchase orders for Fund
shares, except for reinvestment of dividends and distributions.

If you maintain your investment in the Fund through the Maturity
Date, do not redeem any shares, and reinvest all dividends and
distributions, you will be entitled to redeem your shares held as of
the Maturity Date for the greater of the then-current net asset value
of your shares or your Warranty Amount. A transfer or re-registration
of existing shares during the Warranty Period that does not result in
an increase in Fund shares that are issued and outstanding will not
interrupt the seven year period calculated to determine the Warranty
Amount. Shareholders must redeem their shares in the Fund on, and only
on, the Maturity Date (March 3, 2011) to ensure that they receive the
greater of the then-current net asset value of the Fund or their
Warranty Amount. Prior to the Maturity Date the Fund will provide each
shareholder a notice reminding them that shares must be redeemed on the
Maturity Date to receive the full benefit of the Financial Warranty. In
the event there is a shortfall on the Maturity Date, each redeeming
shareholder will be entitled to redemption proceeds that include a pro
rata allocation of any payments made to the Fund by the Warranty
Provider. Shareholders who remain invested in the Fund past the
Maturity Date will also receive the benefit of a pro rata allocation of
any shortfall payments made by the Warranty Provider, if any, on the
Maturity Date. However, after the Maturity Date shares of the Fund will
not be protected by the Financial Warranty, will be subject to market
fluctuations, and will then be redeemable at the Fund's then-current
net asset value, which may be lower than the Warranty Amount.

The Fund never restricts your ability to redeem your shares.
However, shareholders who do not reinvest their distributions or
dividends will reduce their Warranty Amount and shareholders who redeem
prior to the Maturity Date will bear the cost of the Warranty Agreement
without receiving any corresponding benefit. As explained in the
examples on pages 24-26, if you reinvest your dividends and
distributions, the number of shares you own in the Fund will increase
at each date on which a dividend or distribution is effective and the
corresponding Warranty Amount per share decreases so that your overall
Warranty Amount does not change. Therefore, if you fail to reinvest the
Fund's dividends or distributions or you redeem Fund shares, your
overall Warranty Amount will decrease because you will have fewer
shares multiplied by the applicable Warranty Amount per share. See "How
is the Warranty Amount Determined?" for further information.
Shareholders (other than certain retirement plans) are subject to
income taxes on distributions from the Fund whether they take payment
of distributions in cash or reinvest them to purchase additional Fund
shares.

If the Fund incurs certain Extraordinary Expenses or if the
Manager is required to make payments under the Warranty Agreement in
certain instances and the Manager fails to do so in a timely manner,
your Warranty Amount also will be reduced by the proportionate amount
of the Extraordinary Expenses or the amount of the payment which the
Manager failed to make.

"Extraordinary Expenses" means any Fund fees and expenses that
are not incurred or accrued in the ordinary course of the Fund's
business (including for example, all costs of defending or prosecuting
any claim, or litigation, to which the Fund is a party, together with
any amounts in judgment, settlement or indemnification expense incurred
by the Fund or any other non-recurring, non-operating expenses). If the
Fund's assets are invested completely and irreversibly in the debt
portfolio, Extraordinary Expenses will also include any Fund fees and
expenses incurred in excess of the Fund's expense limits whether or not
incurred in the ordinary course of the Fund's business. Those expense
limits are 1.30% for Class A shares, 2.05% for Class B shares and 2.05%
for Class C shares. The Fund will invest its assets completely and
irreversibly in the debt portfolio if the Warranty Formula provides for
such allocation or if, under the terms of the Warranty Agreement, the
Warranty Provider exercises its right to instruct the Manager to
allocate the Fund's assets to the debt portfolio, or deliver to the
Fund's Custodian pre-signed instructions from the Manager instructing
the Custodian to immediately allocate all of the assets of the Fund to
the debt portfolio.

Post-Warranty Period. On and after the Maturity Date, you can redeem
your shares or exchange your shares for shares of the same class of
another Oppenheimer fund that offers an exchange privilege. The value
of your shares on the Maturity Date will be the greater of (i) the
then-current net asset value of the Fund or (ii) the Warranty Amount.
Because the benefits of the Warranty Agreement terminate after the
Maturity Date, the entire amount of your investment in the Fund
following the Maturity Date will be subject to market risk.

If after the Maturity Date shares of the Fund remain issued and
outstanding, the Board may elect at the recommendation of the Manager
and without shareholder approval (1) to have the Fund redeem all issued
and outstanding shares and then terminate the Fund, (2) to merge the
Fund into the Underlying Fund, or (3) to continue the existence of the
Fund. Shareholders who continue their investment in the Fund after the
Maturity Date will receive prior notice of the Board's decision. If the
Board chooses to have the Fund redeem all issued and outstanding shares
and terminate the Fund, those remaining shareholders will receive the
then-current net asset value, which may be more or less than their
Warranty Amount. If the Board chooses to continue the existence of the
Fund during the Post-Warranty Period, then the Fund's investment
objectives will be changed by the Board to the single objective of
seeking high total return and the Fund's name will change to an
appropriate name as determined by the Board. To achieve that objective,
the Fund may invest its assets during the Post-Warranty Period
primarily in shares of the Underlying Fund, common stocks of U.S.
companies of different capitalization ranges, and debt securities, such
as bonds and debentures. The Manager will sell a portfolio security
during the Post-Warranty Period if it determines that the security will
not provide the return anticipated. During the Post-Warranty Period,
the Fund's shares will be offered on a continuous basis. Shareholders
will not have the benefit of the Financial Warranty during the
Post-Warranty Period.

------------------------------------------------------------------------
An investment in the Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency or any person.
------------------------------------------------------------------------

The Fund's Past Performance

Please remember that the Fund is intended to be a long-term investment
and that performance results are historical, and that past performance
(particularly over a short-term period) is not predictive of future
results. Because the Fund may invest a significant amount of its assets
in Class Y shares of the Underlying Fund, financial information about
Class Y shares of the Underlying Fund is included beginning on page 46
of this Prospectus. That information is not intended to predict the
performance of the Fund. The Fund's performance will differ from the
performance of the Underlying Fund.

The bar chart and table below show one measure of the risks of
investing in the Fund, by showing the Fund's performance (for its Class
A shares) for the full calendar year since the Fund's inception and by
showing how the average annual total returns of the Fund's shares, both
before and after taxes, compared to those of a broad-based market
index. The after-tax returns for the other classes of shares will vary.

The after-tax returns are shown for Class A shares only and are
calculated using the historical highest individual federal marginal
income tax rates in effect during the periods shown, and do not reflect
the impact of state or local taxes. In certain cases, the figure
representing "Return After Taxes on Distributions and Sale of Fund
Shares" may be higher than the other return figures for the same
period. A higher after-tax return results when a capital loss occurs
upon redemption and translates into an assumed tax deduction that
benefits the shareholder. The after-tax returns are calculated based on
certain assumptions mandated by regulation and your actual after-tax
returns may differ from those shown, depending on your individual tax
situation. The after-tax returns set forth below are not relevant to
investors who hold their fund shares through tax-deferred arrangements
such as IRAs or to institutional investors not subject to tax. The
Fund's past investment performance, before and after taxes, is not
necessarily an indication of how the Fund will perform in the future.

Annual Total Returns (Class A) (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing the annual
total return]

Sales charges and taxes are not included in the calculations of return
in this bar chart, and if those charges and taxes were included, the
returns may be less than those shown.

For the period from January 1, 2006 through September 30, 2006, the
cumulative return (not annualized) before taxes for Class A shares was
4.06%.

During the period shown in the bar chart, the highest return (not
annualized) before taxes for a calendar quarter was 3.21% (4th Qtr 04)
and the lowest return (not annualized) before taxes for a calendar
quarter was -2.72% (2nd Qtr 04).

---------------------------------------------------------------------------------

Average Annual Total Returns 1 Year 5 Years
for the periods ended December 31, (or life of class, if
2005 less)

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class A Shares (inception November

10, 2003) -3.80% -0.99%
Return Before Taxes -4.37% -1.56%
Return After Taxes on Distributions
Return After Taxes on Distributions -2.47% -1.17%
and Sale of Fund Shares

---------------------------------------------------------------------------------

S&P 500 Index (reflects no deduction 4.91% 10.23%(1)
for fees, expenses or taxes)

---------------------------------------------------------------------------------

Class B Shares (inception November -3.72% -0.39%

10, 2003)
---------------------------------------------------------------------------------

Class C Shares (inception November 0.30% 1.03%

10, 2003)
---------------------------------------------------------------------------------
From 10/31/03.

The Fund's average annual total returns include applicable sales
charges: for Class A, the current maximum initial sales charge of
5.75%; for Class B, the contingent deferred sales charge of 5% (1-year)
and 3% (life of class); and for Class C, the 1% contingent deferred
sales charge for the 1-year period. The returns measure the performance
of a hypothetical account and assume that all dividends and capital
gains distributions have been reinvested in additional shares. The
performance of the Fund's Class A shares is compared to the Standard &
Poor's 500 Index, an unmanaged index of U.S. equity securities. The
index performance includes reinvestment of income but does not reflect
transaction costs, fees, expenses or taxes. The Fund's investments vary
from those in the index.

Fees and Expenses of the Fund

The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services
and for the Financial Warranty. Those expenses are subtracted from the
Fund's assets to calculate the Fund's net asset value per share. All
shareholders therefore pay those expenses indirectly. The fees for the
Fund may be higher than fees paid by other mutual funds which do not
offer principal protection. While the Fund will indirectly bear its pro
rata share of the expenses of the Underlying Fund, the Manager will
reimburse the Fund for the full amount of those expenses, other than
Extraordinary Expenses, indirectly incurred by the Fund as an investor
in the Underlying Fund. Therefore, shareholders will not bear any
expenses, other than Extraordinary Expenses, of the Underlying Fund by
investing in shares of this Fund. Shareholders pay other expenses
directly, such as sales charges and account transaction charges. The
following tables are meant to help you understand the fees and expenses
you may pay if you buy and hold shares of the Fund. "Other Expenses"
and "Total Annual Operating Expenses" are based on the Fund's expenses
during its fiscal year ended August 31, 2006.

Shareholder Fees (charges paid directly from your investment):
---------------------------------------------------------------------------------
Class A Class B Class C
Shares Shares Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maximum Sales Charge (Load) on 5.75% None None
purchases (as % of offering price)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as % of the lower of the original offering None(1) 5%(2) 1%(3)
price or redemption proceeds)
---------------------------------------------------------------------------------

Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
---------------------------------------------------------------------------------
Class A Class B Class C
Shares Shares(4) Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Management Fees(5) 0.50% 0.50% 0.50%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Distribution and/or Service (12b-1) Fees 0.25% 1.00% 1.00%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Warranty Fee(6) 0.60% 0.60% 0.60%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Other Expenses(7) 0.11% 0.15% 0.12%

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Total Annual Operating Expenses 1.46% 2.25% 2.22%

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Underlying Fund Operating Expenses(8) 0.29% 0.29% 0.29%

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Total Annual Fund and Underlying Fund 1.75% 2.54% 2.51%
Operating Expenses

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Less Contractual Reimbursement of Underlying 0.29% 0.29% 0.29%
Fund Expenses(9)

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Net Annual Fund Operating Expenses (after 1.46% 2.25% 2.22%
contractual fee reimbursements)

---------------------------------------------------------------------------------

Expenses may vary in future years.

1. A contingent deferred sales charge may apply to redemptions of
investments of $1 million or more of Class A shares. See "How to Sell
Shares - How Contingent Deferred Sales Charges Affect Redemptions" for
details.
2. Applied to redemptions in first year after purchase. The contingent
deferred sales charge gradually declines from 5% to 1% in years one
through six and is eliminated after that.
3. Applied to shares redeemed within 12 months of purchase.
4. Class B shares automatically convert to Class A shares 88 months
after purchase.

5. "Management Fees" in the table above reflect the maximum annual
management fee rate under the investment advisory agreement. During the
Warranty Period, the management fees shall be 0.40% per annum of
average annual net assets of the Fund in any month following a month
where the Fund's investment in equity securities is, on average, less
than 10% of net assets. The Manager has contractually agreed to further
reduce its management fee to 0.25% of average annual net assets for the
remainder of the Warranty Period in the event that 100% of the Fund's
assets are completely and irreversibly invested in the debt portfolio
to the extent necessary so that total annual operating expenses of the
Fund (other than Extraordinary Expenses such as litigation costs) do
not exceed 1.30% for Class A shares, 2.05% for Class B shares and 2.05%
for Class C shares. However, if this reduction in the management fee is
not sufficient to reduce total annual operating expenses to these
limits, the Manager is not required to subsidize Fund expenses to
assure that expenses do not exceed those limits. Furthermore, if the
Fund's total annual operating expenses exceed those limits while the
Fund's assets are completely and irreversibly allocated to the debt
portfolio, the Warranty Amount will be reduced by the portion of the
Fund's annual operating expenses that exceed those limits.
6. If the Fund becomes completely and irreversibly invested in the debt
portfolio, the Warranty Fee payable by the Fund to the Warranty
Provider under the Warranty Agreement will decrease to 0.35% per annum.
7. "Other Expenses" include transfer agent fees, custodial fees, and
accounting and legal expenses that the Fund pays. The Transfer Agent
has voluntarily undertaken to the Fund to limit the transfer agent fees
to 0.35% of average daily net assets per fiscal year for all classes.
That voluntary undertaking may be amended or withdrawn at any time.
During the Fund's last fiscal year, no transfer agent fees were waived
or reimbursed pursuant to this voluntary undertaking.
8. "Underlying Fund Operating Expenses" reflects the expenses incurred
indirectly by the Fund through its investment in shares of the
Underlying Fund. The expenses of the Underlying Fund are based on the
net annual expense ratio, after giving effect to any waivers or
reimbursements, of the Underlying Fund for its last fiscal year.
9. Under the terms of the investment advisory agreement, the Manager
has agreed, for the duration of the investment advisory agreement, to
reimburse the Fund for expenses equal to the Underlying Fund expenses,
other than Extraordinary Expenses, paid by the Fund as a shareholder in
the Underlying Fund.

EXAMPLES. The following examples are intended to help you compare the
cost of investing in the Fund with the cost of investing in other
mutual funds. The examples are based on the "Net Annual Fund Operating
Expenses" shown in the table above, and assume that you invest $10,000
in a class of shares of the Fund for the time periods indicated and
reinvest your dividends and distributions.

The first example assumes that you redeem all of your shares at
the end of those periods. The second example assumes that you keep your
shares. Both examples also assume that your investment has a 5% return
each year and that the class's operating expenses remain the same. Your
actual costs may be higher or lower because expenses will vary over
time. Based on these assumptions your expenses would be as follows:

-------------------------------------------------------------------------------

If shares are redeemed:* 1 Year 3 Years 5 Years 10 Years

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class A Shares $716 $1,013 $1,332 $2,233
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Class B Shares $731 $1,011 $1,418 $2,316**

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Class C Shares $328 $702 $1,203 $2,582

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

If shares are not redeemed:* 1 Year 3 Years 5 Years 10 Years

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class A Shares $716 $1,013 $1,332 $2,233
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Class B Shares $231 $711 $1,218 $2,316**

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Class C Shares $228 $702 $1,203 $2,582

-------------------------------------------------------------------------------

*In the first example, expenses include the initial sales charge for
Class A and the applicable Class B or Class C contingent deferred sales
charges. In the second example, the Class A expenses include the sales
charge, but Class B and Class C expenses do not include the contingent
deferred sales charges.
** Class B expense for years 8 through 10 are based on Class A expenses
because Class B shares automatically convert to Class A 88 months after
purchase.

About the Fund's Investments

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS. The allocation of
the Fund's assets among the debt portfolio and the equity portfolio
will vary over time based upon the Warranty Formula, which is a
mathematical formula intended to allow the Fund to have a net asset
value on the Maturity Date at least equal to the Warranty Amount. The
Statement of Additional Information contains more detailed information
about the Fund's investment policies and risks.

Investment in Shares of Oppenheimer Main Street Fund(R). The Fund invests
most of the equity portfolio in Class Y shares of Oppenheimer Main
Street Fund(R)(the "Underlying Fund"). The Underlying Fund seeks high
total return, by investing mainly in common stocks of U.S. companies of
different capitalization ranges, presently focusing on large
capitalization issuers. It also can buy debt securities, such as bonds
and debentures but does not currently emphasize these investments. The
portfolio managers of the Underlying Fund use a variety of proprietary
quantitative models to rank stocks on the basis of valuation, momentum
and investor psychology, fundamental research about particular
industries and individual judgment. While this process and the
inter-relationship of the factors used may change over time and its
implementation may vary in particular cases, in general the selection
process currently involves the use of:
o Multi-factor quantitative models: The Underlying Fund uses both
"top down" and "bottom up" models. The "top down" models are
primarily used to help the portfolio managers of the Underlying
Fund determine its market capitalization exposure (large, mid,
small) and rely on indicators such as relative valuations,
relative price trends and interest rate relationships. The
"bottom up" models help the portfolio managers identify the most
attractive stocks within each market capitalization category.
These stock selection models are based upon many factors that
measure the attractiveness of individual securities relative to
each other. The portfolio managers typically follow and analyze
more than 3,000 stocks on a daily basis and select those that are
deemed attractive.
o Fundamental research: The portfolio managers use internal
research and analysis by other market analysts, with emphasis on
current company news and industry-related events.
o Judgment: The portfolio is then continuously rebalanced by the
portfolio managers, using the tools described above.

The portfolio managers of the Underlying Fund emphasize wide
diversification. The allocation of the Underlying Fund's portfolio
among different investments will vary over time based upon the
Manager's evaluation of economic and market trends. The Underlying
Fund's portfolio might not always include all of the different types of
investments described below.

Stock Investments. The Underlying Fund currently invests mainly in
common stocks. The Underlying Fund currently focuses on
securities of issuers that have large capitalizations.
Historically the prices of securities of large capitalization
issuers have tended to be less volatile than those of smaller
issuers. However, the Underlying Fund can buy stocks of issuers
in all capitalization ranges. "Capitalization" refers to the
market value of all of the issuer's outstanding common stock.
Debt Securities. The mix of equities and debt securities in the
Underlying Fund's portfolio will vary over time depending on the
Manager's judgment about market and economic conditions. The
Underlying Fund currently does not emphasize investment in debt
securities. The Underlying Fund's investments in debt securities
can include securities issued or guaranteed by the U.S.
government or its agencies and instrumentalities, and foreign and
domestic corporate bonds, notes and debentures. Securities issued
by government-sponsored enterprises, such as the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage
Association and the Federal Home Loan Bonds, are neither
guaranteed nor insured by the U.S. government and thus may
experience greater credit risk than other types of U.S.
government securities. They may be selected for their income
possibilities, for liquidity and to help cushion fluctuations in
the Underlying Fund's net asset values.

The debt securities the Underlying Fund buys may be rated by
nationally recognized rating organizations such as Moody's
Investors Service, Inc. or Standard & Poor's Rating Service or
they may be unrated securities assigned a comparable rating by
the Manager.
o Special Credit Risks of Lower-Grade Securities. The Underlying
Fund can invest up to 25% of its total assets in "lower-grade"
securities commonly known as "junk bonds." These are
securities rated below "Baa" by Moody's Investors Service,
Inc. or "BBB" by Standard & Poor's Ratings Service or have
similar ratings by other ratings organizations, or, if
unrated, assigned a comparable rating by the Manager. However,
the Underlying Fund currently does not intend to invest more
than 10% of its assets in lower-grade securities and cannot
invest more than 10% of its total assets in lower-grade
securities that are not convertible.

Debt securities below investment grade, whether rated or unrated,
have greater risks than investment-grade securities. There may be
less of a market for them and therefore they may be harder to
sell at an acceptable price. There is a relatively greater
possibility that the issuer's earnings may be insufficient to
make the payments of interest and principal when due. These risks
mean that the Underlying Fund's net asset value per share could
be affected by declines in value of these securities.
Risks of Foreign Investing. The Underlying Fund can buy securities of
companies or governments in any country, developed or
underdeveloped. While there is no limit on the amount of the
Underlying Fund's assets that may be invested in foreign
securities, the Manager does not currently plan to invest
significant amounts of the Underlying Fund's assets in foreign
securities. While foreign securities offer special investment
opportunities, there are also special risks, such as the effects
of a change in value of a foreign currency against the U.S.
dollar, which will result in a change in the U.S. dollar value of
securities denominated in that foreign currency. Foreign issuers
are not subject to the same accounting and disclosure
requirements to which U.S. companies are subject. The value of
foreign investments may be affected by exchange control
regulations, expropriation or nationalization of a company's
assets, foreign taxes, delays in settlement of transactions,
changes in governmental economic or monetary policy in the U.S.
or abroad, or other political and economic factors.

Additionally, if the Underlying Fund invests a significant amount
of its assets in foreign securities, it might expose the fund to
"time-zone arbitrage" attempts by investors seeking to take
advantage of the differences in value of foreign securities that
might result from events that occur after the close of the
foreign securities market on which a foreign security is traded
and the close of the New York Stock Exchange (the "NYSE") that
day, when the Underlying Fund's net asset value is calculated. If
such time-zone arbitrage were successful, it might dilute the
interests of other shareholders. However, the Underlying Fund's
use of "fair value pricing" to adjust the closing market prices
of foreign securities under certain circumstances, to reflect
what the Manager and the Board believe to be their fair value may
help deter those activities.
Other Equity Securities. Equity securities include common stocks, as
well as "equity equivalents" such as preferred stocks and
securities convertible into common stock. Preferred stock has a
set dividend rate and ranks after bonds and before common stocks
in its claim for dividends and on assets if the issuer is
liquidated or becomes bankrupt. The Manager considers some
convertible securities to be "equity equivalents" because of the
conversion feature and in that case their rating has less impact
on the investment decision than in the case of debt securities.
Illiquid and Restricted Securities. Investments may be illiquid because
they do not have an active trading market, making it difficult to
value them or dispose of them promptly at an acceptable price.
Restricted securities may have terms that limit their resale to
other investors or may require registration under applicable
securities laws before they can be sold publicly. The Underlying
Fund will not invest more than 10% of its net assets in illiquid
or restricted securities. The Underlying Fund's Board can
increase that limit to 15%. Certain restricted securities that
are eligible for resale to qualified institutional purchasers may
not be subject to that limit. The Manager monitors holdings of
illiquid securities on an ongoing basis to determine whether to
sell any holdings to maintain adequate liquidity.
Derivative Investments. The Underlying Fund can invest in a number of
different kinds of "derivative" investments. In general terms, a
derivative investment is an investment contract whose value
depends on (or is derived from) the value of an underlying asset,
interest rate or index. In the broadest sense, options, futures
contracts, and other hedging instruments the Underlying Fund
might use may be considered "derivative" investments. The
Underlying Fund currently does not use derivatives to a
significant degree and is not required to use them in seeking its
objective.

Derivatives have risks. If the issuer of the derivative
investment does not pay the amount due, the Underlying Fund can
lose money on the investment. The underlying security or
investment on which a derivative is based, and the derivative
itself, may not perform the way the Manager expected it to. As a
result of these risks the Underlying Fund could realize less
principal or income from the investment than expected or its
hedge might be unsuccessful. As a result, the Underlying Fund's
share prices could fall. Certain derivative investments held by
the Underlying Fund might be illiquid.
o Hedging. The Underlying Fund can buy and sell futures
contracts, put and call options, forward contracts and options
on futures and securities indices. These are all referred to
as "hedging instruments." Some of these strategies would hedge
the Underlying Fund's portfolio against price fluctuations.
Other hedging strategies, such as buying futures and call
options, would tend to increase the Underlying Fund's exposure
to the securities market.

There are also special risks in particular hedging strategies.
Options trading involves the payment of premiums and can
increase portfolio turnover. If the Manager used a hedging
instrument at the wrong time or judged market conditions
incorrectly, the strategy could reduce the Underlying Fund's
return.

Investments in Oppenheimer Institutional Money Market Fund. The Fund
can invest its free cash balances in the Class E shares of
Oppenheimer Institutional Money Market Fund, to seek current
income while preserving liquidity. The Oppenheimer Institutional
Money Market Fund is a registered open-end management investment
company, regulated as a money market fund under the Investment
Company Act of 1940, as amended. It invests in a variety of
short-term, high-quality, dollar-denominated money market
instruments issued by the U.S. government, domestic and foreign
corporations and financial institutions, and other entities. As a
shareholder, the Fund will be subject to its proportional share
of the Oppenheimer Institutional Money Market Fund's Class E
expenses, including its advisory fee. However, the Manager will
waive a portion of the Fund's advisory fee to the extent of the
Fund's share of the advisory fee paid by the Oppenheimer
Institutional Money Market Fund.

Temporary Defensive and Interim Investments. In times of adverse or
unstable market, economic or political conditions, the Underlying
Fund can invest up to 100% of its total assets in temporary
defensive investments that are inconsistent with its principal
investment strategies. Generally, they would be money market
instruments, U.S. government securities, highly-rated commercial
paper, or repurchase agreements. The Underlying Fund may also
hold these types of securities pending the investment of proceeds
from the sale of Underlying Fund shares or portfolio securities
or to meet anticipated redemptions of Underlying Fund shares. To
the extent the Underlying Fund invests defensively in these
securities, it may not achieve its investment objective. For more
information about the types of securities the Underlying Fund may
invest in, you can request a prospectus of Oppenheimer Main
Street Fund by calling the toll-free number listed on the back
cover of this Prospectus.

Loans of Portfolio Securities. The Underlying Fund may make loans of
its portfolio securities, with a value not to exceed 25% of its
net assets, in accordance with policies approved by the
Underlying Fund's Board. The Underlying Fund has entered into a
securities lending agreement with JPMorgan Chase Bank, N.A.
("JPMorgan Chase") for that purpose. Under the agreement, the
Underlying Fund's portfolio securities may be loaned to brokers,
dealers and financial institutions, provided that such loans
comply with the collateralization and other requirements of the
securities lending agreement, the Underlying Fund's policies and
applicable government regulations. JPMorgan Chase has agreed, in
general, to bear the risk that a borrower may default on its
obligation to return loaned securities. However, the Underlying
Fund will be responsible for risks associated with the investment
of cash collateral, including the risk of a default by the issuer
of a security in which cash collateral has been invested. If that
occurs, the Underlying Fund may incur additional costs in seeking
to obtain the collateral or may lose the amount of the collateral
investment. The Underlying Fund may also lose money if the value
of the investments purchased with cash collateral decreases.

INVESTMENT IN DEBT SECURITIES. During the Warranty Period, the Fund
will invest a portion of its assets, and in certain circumstances the
Fund may invest all of its assets, in U.S. government securities having
a maturity approximately equal to the period remaining in the Warranty
Period.

U.S. Government Securities. U.S. government securities the Fund buys
will consist of non-callable general obligations of the U.S.
Treasury backed by the full faith and credit of the U.S.
government or of any of the following U.S. government agencies:
Federal National Mortgage Association, Federal Home Loan Mortgage
Corporation, Federal Home Loan Bank, Resolution Funding
Corporation, Financing Corporation and Tennessee Valley
Authority, provided such securities are rated no less than "AAA"
by Standard & Poor's Rating Services or "Aaa" by Moody's
Investors Service, Inc. Securities issued by the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage
Association and the Federal Home Loan Banks are neither
guaranteed nor insured by the U.S. government.
o U.S. Treasury Obligations. These include Treasury bills (having
maturities of one year or less when issued), Treasury notes
(having maturities of more than one year and up to ten years
when issued), and Treasury bonds (having maturities of more
than ten years when issued). Treasury securities are backed by
the full faith and credit of the United States as to timely
payments of interest and repayments of principal. The Fund can
buy U. S. Treasury securities that have been "stripped" of
their coupons and zero-coupon securities described below.
o Obligations Issued or Guaranteed by U.S. Government Agencies or
Instrumentalities. These include direct obligations and
mortgage-related securities that have different levels of
credit support from the U.S. government. Government National
Mortgage Association ("Ginnie Mae") pass-through mortgage
certificates, for example, are supported by the full faith and
credit of the U.S. government.
Zero-Coupon Securities. Some of the debt securities the Fund buys are
zero-coupon bonds that pay no interest. The Fund can invest up to
100% of its assets in zero-coupon U.S. government securities.
They are issued at a substantial discount from their face value.
Because zero-coupon securities have no reinvestment risk if held
to maturity, they are more appropriate than coupon-paying
securities for seeking to ensure that the Fund has a certain
amount of assets at the end of a set period of time. Zero-coupon
securities are subject to greater fluctuations in price from
interest rate changes than typical debt securities that pay
interest on a regular basis. The Fund may have to pay out the
imputed income on zero-coupon securities without receiving the
cash currently. The Fund will not purchase zero-coupon securities
in the form of collateralized mortgage obligations.
Short-Term Debt Securities. The Fund can buy high-quality, short-term
money market instruments, including obligations of the U.S.
government and its agencies, and certain short-term demand and
time deposits in, certificates of deposit of and bankers'
acceptances issued by certain U.S. depository institutions or
trust companies, and certain commercial paper having a maturity
of not more than 180 days, which are short-term, negotiable
promissory notes of companies. Because these instruments tend to
offer lower yields than other debt securities, the Fund
ordinarily uses them for liquidity and cash management purposes
or for defensive purposes when market conditions are unstable.
Portfolio Turnover. A change in the securities held by the Fund is
known as "portfolio turnover." The Fund can engage in active and
frequent trading to try to achieve its objective, and will likely
have a high portfolio turnover rate. Increased portfolio turnover
creates higher brokerage and transaction costs for the Fund (and
may reduce performance). However, most of the Fund's portfolio
transactions are principal trades that do not entail brokerage
fees. If the Fund realizes capital gains when it sells its
portfolio investments, it must generally pay those gains out to
shareholders, increasing their taxable distributions. The
Financial Highlights table at the end of the Prospectus shows the
Fund's portfolio turnover rate during the past fiscal year.

Loans of Portfolio Securities. The Fund may make loans of its portfolio
securities, with a value not to exceed 331/3% of its net assets,
in accordance with policies approved by the Fund's Board. The
Fund has entered into a securities lending agreement with
JPMorgan Chase for that purpose. Under the agreement, the Fund's
portfolio securities may be loaned to brokers, dealers and
financial institutions, provided that such loans comply with the
collateralization and other requirements of the securities
lending agreement, the Fund's policies and applicable government
regulations. JPMorgan Chase has agreed, in general, to bear the
risk that a borrower may default on its obligation to return
loaned securities. However, the Fund will be responsible for
risks associated with the investment of cash collateral,
including the risk of a default by the issuer of a security in
which cash collateral has been invested. If that occurs, the Fund
may incur additional costs in seeking to obtain the collateral or
may lose the amount of the collateral investment. The Fund may
also lose money if the value of the investments purchased with
cash collateral decreases.

ASSET ALLOCATION. The Manager allocates the Fund's assets between the
equity portfolio (shares of the Underlying Fund) and the debt portfolio
(consisting of U.S. government securities, including zero coupon bonds
and certain securities guaranteed by certain U.S. government agencies
and instrumentalities) based upon the Warranty Formula. The Manager
evaluates the relative allocation between the equity portfolio and debt
portfolio daily and makes any necessary adjustments to the Fund's
portfolio. The Warranty Formula may allocate between 0% to 100% of the
Fund's assets to the equity portfolio. The allocation during the
Warranty Period will fluctuate in response to changes in the securities
markets. Factors reflected in the asset allocation methodology include,
but are not limited to:
o The market value of the Fund's assets as compared to the Warranty
Amount
o The prevailing level of interest rates
o Equity market volatility
o The length of time remaining until the Maturity Date

Under the terms of the Warranty Agreement, the Fund may be
required in certain limited circumstances, including a material decline
in the value of the Fund's assets relative to the Warranty Amount or a
breach by the Fund or the Manager of its obligations under the Warranty
Agreement, to invest all or a substantial portion of its assets in U.S.
government securities (as well as cash and cash equivalents to the
extent necessary to meet redemption requests and Fund expenses) or in
zero coupon U.S. government securities (and cash or cash equivalents to
the extent necessary to meet redemption requests and Fund expenses).

Specifically, situations where the Warranty Provider can require
the Fund to invest all of its assets in the debt portfolio include:

o if the Fund issues additional shares during the Warranty Period
in violation of the Warranty Agreement;
o if the Fund invests in securities other than as permitted in this
Prospectus or uses leverage in violation of the Financial
Warranty Agreement;
o if the Fund's investment in the equity portfolio on any given day
exceeds certain limitations as established by, or the Fund
fails to allocate assets pursuant to, the Warranty Formula;
o if the Fund fails to comply with the expense limitations imposed
on the Fund if it is required to invest completely and
irreversibly in the debt portfolio;
o if the Fund fails to pay the Warranty Agreement fee when due;
o if the investment advisory agreement with the Manager is
terminated and the successor investment adviser is not
acceptable to the Warranty Provider;
o if the Manager fails to manage the Fund in accordance with its
objectives, policies and strategies;
o if the Manager, the Fund or the Custodian fails to provide the
Warranty Provider with certain information necessary for it to
monitor the Fund's compliance with the Warranty Agreement;
o if representations or warranties made by the Manager or the Fund
in certain agreements and documents were incorrect or
misleading when made;
o if the Manager, the Fund or the Custodian fails to perform any
obligation or breaches any covenant under the Warranty
Agreement or other related agreements and such failure could
have an adverse effect on the Warranty Provider (including a
change to the Fund's investment objective or any material
change to the Fund's investment policies or strategies without
the Warranty Provider's prior written consent, even where such
change is in the Fund's and the shareholders' best interest);
o if the commencement of any proceeding in a federal, state or
local court which if adversely determined, could have an
adverse effect on the Manager or the Fund;
o if an action or proceeding is commenced to place the Fund or the
Manager in receivership or bankruptcy; or
o if any governmental or regulatory action limits, suspends, or
terminates the rights, privileges or operation of the Manager
or the Fund that could adversely affect the Manager or the
Fund.

Under the Warranty Agreement, the Fund is also required to
satisfy certain risk management requirements, which will also restrict
the manner in which the Fund may invest its assets. The Fund's holdings
of cash and cash equivalents will generally be limited to an amount
necessary to meet anticipated expenses and redemptions.

The Warranty Formula may require the Fund to have a higher
portfolio turnover rate as compared to other mutual funds.

CAN THE FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? The Fund's
Board of Trustees can change non-fundamental investment policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus. Fundamental policies cannot
be changed without the approval of a majority of the Fund's outstanding
voting shares. The Fund's investment objective is a fundamental policy.
Other investment restrictions that are fundamental policies are listed
in the Statement of Additional Information. An investment policy is not
fundamental unless this Prospectus or the Statement of Additional
Information says that it is.

The Warranty Agreement and the Financial Warranty

The Fund has entered into the Warranty Agreement to help make sure that
on the Maturity Date each shareholder will be entitled to redeem his or
her shares for an amount not less than the Warranty Amount, i.e., the
initial value of that shareholder's account on the second business day
after the end of the Offering Period (including any net income earned
by the Fund during the Offering Period and the two business days
subsequent thereto, but reduced by any adjustments the Warranty
Provider is permitted to make under the Warranty Agreement and less
sales charges and Extraordinary Expenses and a proportionate reduction
for dividends and distributions paid in cash and shares redeemed).
Certain calculations under the Warranty Agreement (including the
calculation of any shortfall) will be performed by an affiliate of the
Warranty Provider as calculation agent.

The Warranty Agreement requires the Manager to comply with
certain investment parameters in an attempt to limit the Fund's risk.
These investment parameters are designed to reduce, but do not
eliminate, the risk that the Fund's assets will be insufficient to
allow the Fund to redeem shares at not less than the Warranty Amount on
the Maturity Date. If the Fund fails to comply with the agreed-upon
investment parameters or otherwise fails to comply with certain
requirements set forth in the Warranty Agreement, the Warranty Provider
may terminate its Financial Warranty in the following limited
circumstances:

o if the Fund liquidates, is merged, reorganizes or sells all or
substantially all of its assets;
o if the Manager ceases to be the adviser of the Fund and any
successor adviser is not acceptable to the Warranty Provider;
o if under the terms of the Warranty Agreement, the Manager or the
Custodian is required to allocate all of the Fund's assets to the
debt portfolio and fails to do so within a reasonable time;
o if the Custodian agreement is amended so that the Custodian or
successor custodian is no longer obligated or does not agree to
provide the Warranty Provider with certain information regarding
the Fund's portfolio as required by the Warranty Agreement;
o if the conditions precedent to the Warranty Provider's issuance
of the Financial Warranty have not been met under the terms of
the Warranty Agreement;
o if the Manager fails to pay to the Warranty Provider a shortfall
amount resulting from the negligence, recklessness, bad faith,
willful misconduct or fraud of the Manager;
o a determination of negligence, recklessness, fraud, bad faith or
willful misconduct on the part of the Manager or the Fund under
the Warranty Agreement and related agreements by a court of
competent jurisdiction or a board of arbitration;
o if the Manager fails to provide the Warranty Provider with
information regarding the Underlying Fund in certain
circumstances;
o if the Manager does not manage the assets of the Fund in
accordance with the Fund's objective, policies and strategies;
o if the Trust establishes another series other than this Fund
during the Warranty Period; or
o if the Manager fails to provide certain instructions and
information to, and cooperate with, the Custodian in the event
that the Warranty Provider has exercised its right to deliver
pre-signed instructions from the Manager to the Custodian
instructing the Custodian to invest all of the Fund's assets in
the debt portfolio.

If the Fund receives notice of termination from the Warranty
Provider, the Fund will promptly notify shareholders of such
termination.

The Warranty Provider (or its affiliate) may monitor the Fund's
compliance with the Warranty Agreement solely to protect the interests
of the Warranty Provider and not the Fund's shareholders. In monitoring
the Fund's compliance, the Warranty Provider (or its affiliate) will
rely predominantly on information provided by the Fund, the Manager and
the Custodian.

The Fund and the Manager may terminate the Warranty Agreement if
the Warranty Provider becomes insolvent or if the Warranty Provider
ceases to be "well capitalized" within the meaning of the capital
maintenance regulations of the Federal Deposit Insurance Corporation.

The Fund will pay to the Warranty Provider, under the Warranty
Agreement, an annual fee equal to 0.60% of the average daily net assets
of the Fund during the Warranty Period. If the Fund is required to make
a complete and irreversible allocation of its assets to the debt
portfolio, the Warranty fee will thereafter be reduced to 0.35% of the
average daily net assets of the Fund. If the value of the Fund's assets
on the Maturity Date is insufficient to result in the value of each
shareholder's account being at least equal to his or her Warranty
Amount (a "Shortfall"), the Warranty Provider will pay to the Fund an
amount sufficient to make sure that each shareholder's account can be
redeemed on the Maturity Date for an amount equal to his or her
Warranty Amount. The amount of any Shortfall required to be paid by the
Warranty Provider will be less if the Warranty Amount is reduced. The
Warranty Amount will be reduced by (i) the amount of any dividends and
distributions taken in cash rather than reinvested in additional shares
of the Fund; (ii) the value of any shares redeemed; (iii) the
shareholder's pro rata portion of the amount of any Extraordinary
Expenses or any expenses incurred by the Fund in excess of the expense
limits described under "Warranty Period" on pages 10-11; (iv) the
shareholder's pro rata portion of the value of any shares issued by the
Fund during the Warranty Period other than in connection with the
reinvestment of dividends and distributions; (v) the amount of any
increase in the Warranty Amount per share as a result of changes in
accounting practices for the Fund, corporate actions or certain other
events; and (vi) if the Manager is required to make payments under the
Warranty Agreement in certain instances and the Manager fails to do so
in a timely manner, the amount of the payments the Manager failed to
make (on a pro rata basis).

A shareholder's ability to receive his or her Warranty Amount
depends on the financial condition of the Warranty Provider. If the
Warranty Provider becomes insolvent or its credit deteriorates
substantially, payment under the Financial Warranty may not be made or
may become unlikely. In such event, the Board could take a variety of
actions, including replacing the Financial Warranty or liquidating the
Fund. In such circumstances, shareholders could suffer a loss of
principal. The Board is under no obligation to replace the Financial
Warranty. If it does so, the fee charged by any replacement warranty
provider may be higher or lower than the fee charged by the Warranty
Provider. If the Board were to determine that liquidation of the Fund
during the Warranty Period is in the shareholders' best interests, the
Warranty Agreement would automatically terminate upon such liquidation
and the Warranty Provider would have no obligations to make a payment
to the Fund. In that event neither the Manager nor any other person
would be liable to make a payment to the Fund to provide shareholders
with their Warranty Amount. Upon liquidation, shareholders would
receive the then-current net asset value of their Fund account, which
may be less than the Warranty Amount they would have received on the
Maturity Date.

The Warranty Agreement may be amended with the prior consent of
the Warranty Provider, the Fund and the Manager. Therefore, material
changes to the Warranty Agreement may be made without shareholder
approval, even to the extent such change could have a direct or
indirect impact on a shareholder's investment in the Fund. Any material
amendments to the Warranty Agreement will be disclosed in amendments to
this Prospectus.

The Fund will provide you with a copy of the most recent audited
annual or unaudited quarterly financial statements of the Warranty
Provider, free of charge, upon your request. To receive a copy of these
financial statements, please contact the Fund at the telephone number
or write to the Fund at the address shown on the outside back cover of
this Prospectus.

HOW IS THE WARRANTY AMOUNT DETERMINED?

Example.*Assume you have $20,000 to invest in Fund shares. Assume that
you decided to purchase Class A shares and the public offering price is
$10.61 per share (initial net asset value of $10.00 per share plus a
sales load of 5.75%). After deducting your sales load of 5.75%,
$18,850.14 will be invested in Fund shares and you will have 1,885.01
shares in your account. Your initial Warranty Amount will be $18,850.14.

* Figures used in the example have been rounded to the nearest
hundredth.

The full amount of your investment will not receive the benefit of the
Financial Warranty. Rather, the Financial Warranty protects only the
amount invested, as reduced by any adjustments to the Warranty Amount
by the Warranty Provider permitted under the Warranty Agreement and
less any sales charges and your proportionate share of certain
Extraordinary Expenses, and reduced proportionately for any dividends
paid in cash or redemption of shares.

Redemption of shares during the Warranty Period will decrease the
Warranty Amount to which a shareholder is entitled. If a shareholder
redeems shares in the Fund, he or she will then hold fewer shares at
the then-current Warranty Amount per share, thereby reducing the
overall Warranty Amount for the shareholder. A redemption made from the
Fund prior to the Maturity Date will be made at the Fund's then-current
net asset value per share, less any applicable deferred sales charge,
which may be higher or lower than the Warranty Amount per share.

The Warranty Amount per share will decline as dividends and
distributions are made to shareholders. If a shareholder automatically
reinvests dividends and distributions in additional shares of the Fund,
the shareholder's total Warranty Amount will remain the same because he
or she will hold a greater number of shares at a reduced Warranty
Amount per share following payment of a dividend or distribution. The
result is to preserve the total Warranty Amount to which he or she was
entitled before the dividend or distribution was made. If a shareholder
elects to receive any dividends or distributions in cash, however, he
or she will hold the original number of shares at the reduced Warranty
Amount per share following payment of a dividend or distribution. This
will reduce the Warranty Amount to which such shareholder was entitled
before the dividend or distribution was made.

Example 1. Assume you reinvest your dividends and distributions. The
number of shares you own in the Fund will increase at each date on
which a dividend or distribution is effective. Although the number of
shares in your account increases, and the Warranty Amount per share
decreases, your overall Warranty Amount does not change. Using our
example, assume it is now December 30, 2006 and the Fund makes
effective a dividend of $0.15 per share. Also, assume that the net
asset value is $11.25 per share at the end of the day on December 30,
2006.

To recalculate your Warranty Amount per share:
1. Determine the value of your dividend. Your total dividend will
equal the per share dividend multiplied by the number of
shares you own the day before the dividend is declared. In our
example, we will multiply 1,885.01 shares by $0.15 per share
to arrive at $282.75.
2. Determine the number of shares that will get added to your
account when your dividend is reinvested. Your additional
shares equal the value of your dividend divided by the ending
net asset value per share on the day the dividend was
declared. In our case, $282.75 divided by $11.25 equals 25.13
additional shares.
3. Adjust your account for your additional shares. Add 1,885.01 and
25.13 to arrive at your new share balance of 1,910.14.
4. Determine your new Warranty Amount per share. Take your original
Warranty Amount and divide by your new share balance. Using
our example, divide $18,850.14 by 1,910.14 shares to arrive at
the new Warranty Amount per share of $9.87.
5. Your Warranty Amount still equals $18,850.14.

If you do not reinvest your dividends and distributions in
additional shares of the Fund, your Warranty Amount will be reduced
with the same effect as if you had reinvested such dividends and
distributions and then immediately redeemed them.

Example 2. Assume you elect to receive Fund dividends and distributions
in cash. On each date on which a dividend or distribution is effective,
the number of shares you own in the Fund will remain the same and the
Warranty Amount per share will decrease resulting in your overall
Warranty Amount declining. Using our example, assume it is now December
30, 2006 and the Fund makes effective a dividend of $0.15 per share.
Also assume that the net asset value is $11.25 per share at the end of
the day on December 30, 2006.

2. Determine your new Warranty Amount per share. Take your original
Warranty Amount and divide by the number of shares you would
have had if you reinvested the distribution. Using our
example, divide $18,850.14 by 1,910.14 shares to arrive at
$9.87 per share.

3. Multiply $9.87 by the number of shares you actually own
(1,885.01) to arrive at your new Warranty Amount of $18,605.05.

Although shareholders can perform this calculation themselves,
the Fund will recalculate the Warranty Amount per share whenever the
Fund declares a dividend or makes a distribution. It is possible that
the Fund's calculations may differ from a shareholder's calculation,
for example, because of rounding or the number of decimal places used.
In each case, the Fund's calculations will control.

See "Dividends, Capital Gains and Taxes" for additional details
regarding the Financial Warranty.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., referred to as the Manager, serves
as Investment Adviser to the Fund and to the Underlying Fund. The
Manager chooses the Fund's investments and handles its day-to-day
business. The Manager carries out its duties, subject to the policies
established by the Fund's Board of Trustees, under an investment
advisory agreement that states the Manager's responsibilities. The
agreement sets the fees the Fund pays to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its business.

The Manager has been an investment advisor since 1960. The
Manager and its subsidiaries and controlled affiliates managed more
than $220 billion in assets as of September 30, 2006, including other
Oppenheimer funds with more than 6 million shareholder accounts. The
Manager is located at Two World Financial Center, 225 Liberty Street,
11th Floor, New York, New York 10281-1008.

Advisory Fees. Under the investment advisory agreement, the Fund pays
the Manager a management fee at an annual rate of 0.50% per annum
of the average annual net assets of the Fund. That fee will apply
during the Warranty Period and the Post-Warranty Period. The
management fee shall be reduced to 0.40% per annum of average
annual net assets of the Fund in any month during the Warranty
Period following a month where the Fund's investment in equity
securities (including shares of Oppenheimer Main Street Fund) is,
on average, less than 10% of net assets. If during the Warranty
Period 100% of the Fund's assets are completely and irreversibly
invested in the debt portfolio, the management fee will be at an
annual rate of 0.25% of the average annual net assets of the
Fund, and if that occurs the Manager will further reduce its
management fee to the extent necessary so that total annual
operating expenses of the Fund (other than Extraordinary Expenses
such as litigation costs) do not exceed 1.30% for Class A shares,
2.05% for Class B shares and 2.05% for Class C shares. However,
if this reduction in the management fee is not sufficient to
reduce total annual operating expenses to these limits, the
Manager is not required to subsidize Fund expenses to assure that
expenses do not exceed those limits. Furthermore, if expenses
exceed these expense limits, the Warranty Amount will be reduced
by any expenses that exceed those limits. The Manager voluntarily
waived its management fee during the Offering Period. A
discussion regarding the basis for the Board of Trustees'
approval of the Fund's investment advisory contract is available
in the Fund's Annual Report to shareholders for the year ended
August 31, 2006.

Pending Litigation. A consolidated amended complaint was filed as a
putative class action against the Manager and the Transfer Agent
(and other defendants) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended
on March 4, 2005. The complaint alleged, among other things, that
the Manager charged excessive fees for distribution and other
costs, and that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers of the funds
breached their fiduciary duties to fund shareholders under the
Investment Company Act of 1940 and at common law. The plaintiffs
sought unspecified damages, an accounting of all fees paid, and
an award of attorneys' fees and litigation expenses.

In response to the defendants' motions to dismiss the suit, seven
of the eight counts in the complaint, including the claims
against certain of the Oppenheimer funds, as nominal defendants,
and against certain present and former Directors, Trustees and
Officers of the funds, and the Distributor, as defendants, were
dismissed with prejudice, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer
Agent was dismissed with prejudice by court order dated April 5,
2006. The plaintiffs filed an appeal of those dismissals on May
11, 2006.

The Manager believes that it is premature to render any opinion
as to the likelihood of an outcome unfavorable to it, the funds,
the Directors/Trustees or the Officers on the appeal of the
decisions of the district court, and that no estimate can yet be
made with any degree of certainty as to the amount or range of
any potential loss. However, the Manager believes that the
allegations contained in the complaint are without merit and that
there are substantial grounds to sustain the district court's
rulings.

Portfolio Managers. The Fund's portfolio is managed by Angelo
Manioudakis and Rudi W. Schadt, who are primarily responsible for
the day-to-day management of the Fund's investments.

Mr. Manioudakis has been a portfolio manager of the Fund since
May 2003. He has been a Senior Vice President of the Manager and
of HarbourView Asset Management Corporation since April 2002. He
has been a Senior Vice President of OFI Institutional Asset
Management, Inc. since June 2002. He is also a portfolio manager
and officer of other portfolios in the OppenheimerFunds complex.
Mr. Manioudakis was Executive Director and portfolio manager for
Miller, Anderson & Sherrerd, a division of Morgan Stanley
Investment Management from August 1993 through April 2002.

Mr. Schadt has been a Vice President and portfolio manager of the
Fund since August 2004. He has been a Vice President, Director
of Equity Analytics and Risk in Product Design and Risk
Management of the Manager since February 2002 and is an officer
and portfolio manager of other portfolios in the OppenheimerFunds
complex. Prior to joining the Manager in February 2002, he was a
Director and Senior Quantitative Analyst from 2000 through 2001
at UBS Asset Management and an Associate Director, Senior
Researcher and Portfolio Manager from June 1997 to August 2000 at
State Street Global Advisors.

The Statement of Additional Information provides additional
information about the Portfolio Managers' compensation, other
accounts they manage and their ownership of Fund shares.

PORTFOLIO HOLDINGS. The Fund's portfolio holdings are included in
semi-annual and annual reports that are distributed to shareholders of
the Fund within 60 days after the close of the period for which such
report is being made. The Fund also discloses its portfolio holdings in
its Statements of Investments on Form N-Q, which are filed with the
Securities and Exchange Commission (the "SEC") no later than 60 days
after the close of its first and third fiscal quarters. These required
filings are publicly available at the SEC. Therefore, portfolio
holdings of the Fund are made publicly available no later than 60 days
after the close of each of the Fund's fiscal quarters.

A description of the Fund's policies and procedures with respect
to the disclosure of the Fund's portfolio securities is available in
the Fund's Statement of Additional Information.

ABOUT YOUR ACCOUNT

CAN YOU PURCHASE SHARES OF THE FUND? No, shares of the Fund cannot be
purchased during the Warranty Period other than by the reinvestment of
the Fund's dividends and distributions in additional shares of the Fund.

Net Asset Value. The Fund calculates the net asset value of each class
of shares as of the close of the NYSE, on each day the NYSE is
open for trading (referred to in this Prospectus as a "regular
business day"). The NYSE normally closes at 4:00 p.m., Eastern
time, but may close earlier on some days. All references to time
in this Prospectus are to "Eastern time."

The net asset value per share for a class of shares on a "regular
business day" is determined by dividing the value of the Fund's
net assets attributable to that class by the number of shares of
that class outstanding on that day. To determine net asset
values, the Fund's asset are valued primarily on the basis of
current market quotations. If market quotations are not readily
available or do not accurately reflect fair value for a security
(in the Manager's judgment) or if a security's value has been
materially affected by events occurring after the close of the
market on which the security is principally traded, that security
may be valued by another method that the Board of Trustees
believes accurately reflects the fair value.

The Board has adopted valuation procedures for the Fund and has
delegated the day-to-day responsibility for fair value
determinations to the Manager's Valuation Committee. Fair value
determinations by the Manager are subject to review, approval and
ratification by the Board at its next scheduled meeting after the
fair valuations are determined. In determining whether current
market prices are readily available and reliable, the Manager
monitors the information it receives in the ordinary course of
its investment management responsibilities for significant events
that it believes in good faith will affect the market prices of
the securities of issuers held by the Fund. Those may include
events affecting specific issuers (for example, a halt in trading
of the securities of an issuer on an exchange during the trading
day) or events affecting securities markets (for example, a
foreign securities market closes early because of a natural
disaster). The Fund uses fair value pricing procedures to reflect
what the Manager and the Board believe to be more accurate values
for the Fund's portfolio securities, although it may not always
be able to accurately determine such values. There can be no
assurance that the Fund could obtain the fair value assigned to a
security if it were to sell the security at the same time at
which the Fund determines its net asset value per share.

If, after the close of the principal market on which a security
held by the Fund is traded and before the time as of which the
Fund's net asset values are calculated that day, an event occurs
that the Manager learns of and believes in the exercise of its
judgment will cause a material change in the value of that
security from the closing price of the security on the principal
market on which it is traded, the Manager will use its best
judgment to determine a fair value for that security.

DISTRIBUTION AND SERVICE (12b-1) PLANS.

Service Plan for Class A Shares. The Fund has adopted a Service Plan
for Class A shares. It reimburses the Distributor for a portion
of its costs incurred for services provided to accounts that hold
Class A shares. Reimbursement is made quarterly at an annual rate
of up to 0.25% of the average annual net assets of Class A shares
of the Fund. The Distributor currently uses all of those fees to
pay dealers, brokers, banks and other financial institutions
periodically for providing personal service and maintenance of
accounts of their customers that hold Class A shares. With
respect to Class A shares subject to a Class A contingent
deferred sales charge purchased by grandfathered retirement
accounts, the Distributor paid the 0.25% service fee to dealers
in advance for the first year after the shares were sold by the
dealer. The Distributor retained the first year's service fee
paid by the Fund. After the shares had been held by grandfathered
retirement accounts for a year, the Distributor paid the service
fee to dealers periodically.

Distribution and Service Plans for Class B and Class C Shares. The Fund
has adopted Distribution and Service Plans for Class B and Class
C shares to pay the Distributor for its services and costs in
distributing Class B and Class C shares and servicing accounts.
Under the plans, the Fund pays the Distributor an annual
asset-based sales charge of 0.75% on Class B and Class C shares.
The Distributor also receives a service fee of 0.25% per year
under the Class B and Class C plans.

The asset-based sales charge and service fees increase Class B
and Class C expenses by 1.0% of the net assets per year of the
respective class. Because these fees are paid out of the Fund's
assets on an on-going basis, over time these fees will increase
the cost of your investment and may cost you more than other
types of sales charges.

The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or
Class C shares. The Distributor paid the 0.25% service fees to
dealers in advance for the first year after the shares are sold
by the dealer. After the shares have been held for a year, the
Distributor pays the service fees to dealers on a periodic basis.
The Distributor normally retains the service fees for accounts
for which it renders the required personal services.

The Distributor paid a sales concession of 3.75% of the purchase
price of Class B shares to dealers from its own resources at the
time of sale. Including the advance of the service fee, the total
amount paid by the Distributor to the dealer at the time of sale
of Class B shares was therefore 4.00% of the purchase price. The
Distributor normally retains the Class B asset-based sales
charge. See the Statement of Additional Information for
exceptions.

The Distributor paid a sales concession of 0.75% of the purchase
price of Class C shares to dealers from its own resources at the
time of sale. Including the advance of the service fee, the total
amount paid by the Distributor to the dealer at the time of sale
of Class C shares was therefore 1.0% of the purchase price. The
Distributor pays the asset-based sales charge as an ongoing
concession to the dealer on Class C shares that have been
outstanding for a year or more. The Distributor typically
retained the asset-based sales charge on Class C shares during
the first year after the purchase of Class C shares. See the
Statement of Additional Information for exceptions.

OTHER PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The
Manager and the Distributor, in their discretion, also may pay dealers
or other financial intermediaries and service providers for
distribution and/or shareholder servicing activities. These payments
are made out of the Manager's and/or the Distributor's own resources,
including from the profits derived from the advisory fees the Manager
receives from the Fund. These cash payments, which may be substantial,
are paid to many firms having business relationships with the Manager
and Distributor. These payments are in addition to any distribution
fees, servicing fees, or transfer agency fees paid directly or
indirectly by the Fund to these financial intermediaries and any
commissions the Distributor pays to these firms out of the sales
charges paid by investors. These payments by the Manager or Distributor
from their own resources are not reflected in the tables in the section
called "Fees and Expenses of the Fund" in this Prospectus because they
are not paid by the Fund.

"Financial intermediaries" are firms that have offered and sold
Fund shares to their clients, or provide shareholder services to the
Fund, or both, and receive compensation for doing so. Your securities
dealer or financial adviser, for example, is a financial intermediary,
and there are other types of financial intermediaries that receive
payments relating to the sale or servicing of the Fund's shares. In
addition to dealers, the financial intermediaries that may receive
payments include sponsors of fund "supermarkets," sponsors of fee-based
advisory or wrap fee programs, sponsors of college and retirement
savings programs, banks and trust companies offering products that hold
Fund shares, and insurance companies that offer variable annuity or
variable life insurance products.

In general, these payments to financial intermediaries can be
categorized as "distribution-related" or "servicing" payments. Payments
for distribution-related expenses, such as marketing or promotional
expenses, are often referred to as "revenue sharing." Revenue sharing
payments may be made on the basis of the sales of shares attributable
to that dealer, the average net assets of the Fund and other
Oppenheimer funds attributable to the accounts of that dealer and its
clients, negotiated lump sum payments for distribution services
provided, or sales support fees. In some circumstances, revenue sharing
payments may create an incentive for a dealer or financial intermediary
or its representatives to recommend or offer shares of the Fund or
other Oppenheimer funds to its customers. These payments also may give
an intermediary an incentive to cooperate with the Distributor's
marketing efforts. A revenue sharing payment, for example, may have
qualified the Fund for preferred status with the intermediary receiving
the payment or provide representatives of the Distributor with access
to representatives of the intermediary's sales force, in some cases on
a preferential basis over funds of competitors. Additionally, as firm
support, the Manager or Distributor may reimburse expenses related to
educational seminars and "due diligence" or training meetings (to the
extent permitted by applicable laws or the rules of the NASD) designed
to increase sales representatives' awareness about Oppenheimer funds,
including travel and lodging expenditures. However, the Manager does
not consider a financial intermediary's sale of shares of the Fund or
other Oppenheimer funds when selecting brokers or dealers to effect
portfolio transactions for the funds.

Various factors are used to determine whether to make revenue
sharing payments. Possible considerations include, without limitation,
the types of services provided by the intermediary, past sales of Fund
shares, the redemption rates on accounts of clients of the intermediary
or overall asset levels of Oppenheimer funds held for or by clients of
the intermediary, the willingness of the intermediary to allow the
Distributor to provide educational and training support for the
intermediary's sales personnel relating to the Oppenheimer funds, the
availability of the Oppenheimer funds on the intermediary's sales
system, as well as the overall quality of the services provided by the
intermediary and the Manager or Distributor's relationship with the
intermediary. The Manager and Distributor have adopted guidelines for
assessing and implementing each prospective revenue sharing
arrangement. To the extent that financial intermediaries receiving
distribution-related payments from the Manager or Distributor sell more
shares of the Oppenheimer funds or retain more shares of the funds in
their client accounts, the Manager and Distributor benefit from the
incremental management and other fees they receive with respect to
those assets.

Payments may also be made by the Manager, the Distributor or the
Transfer Agent to financial intermediaries to compensate or reimburse
them for administrative or other client services provided such as
sub-transfer agency services for shareholders or retirement plan
participants, omnibus accounting or sub-accounting, participation in
networking arrangements, account set-up, recordkeeping and other
shareholder services. Payments may also be made for administrative
services related to the distribution of Fund shares through the
intermediary. Firms that may receive servicing fees include retirement
plan administrators, qualified tuition program sponsors, banks and
trust companies, and others. These fees may be used by the service
provider to offset or reduce fees that would otherwise be paid directly
to them by certain account holders, such as retirement plans.

The Statement of Additional Information contains more information
about revenue sharing and service payments made by the Manager or the
Distributor. Your dealer may charge you fees or commissions in addition
to those disclosed in this Prospectus. You should ask your dealer or
financial intermediary for details about any such payments it receives
from the Manager or the Distributor and their affiliates, or any other
fees or expenses it charges.

Special Investor Services

ACCOUNTLINK. You can use our AccountLink feature to link your fund
account with an account at a U.S. bank or other financial institution.
It must be an Automated Clearing House (ACH) member. AccountLink lets
you:
o transmit funds electronically to purchase shares by telephone
(through a service representative or by PhoneLink) or
automatically under Asset Builder Plans, or
o have the Transfer Agent send redemption proceeds or transmit
dividends and distributions directly to your bank account. Please
call the Transfer Agent for more information.

AccountLink privileges should have been requested on your
Application or your dealer's settlement instructions if you bought your
shares through a dealer. After your account is established, you can
request AccountLink privileges by sending signature-guaranteed
instructions and proper documentation to the Transfer Agent.
AccountLink privileges will apply to each shareholder listed in the
registration on your account as well as to your dealer representative
of record unless and until the Transfer Agent receives written
instructions terminating or changing those privileges. After you
establish AccountLink for your account, any change you make to the bank
account information must be made by signature-guaranteed instructions
to the Transfer Agent signed by all shareholders who own the account.

PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system
that enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the PhoneLink number,
1.800.225.5677.
Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone
from your Fund account to another OppenheimerFunds account you
have already established by calling the special PhoneLink number.

Selling Shares. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How
to Sell Shares," below for details.

CAN YOU SUBMIT TRANSACTION REQUESTS BY FAX? You may send requests for
certain types of account transactions to the Transfer Agent by fax
(telecopier). Please call 1.800.225.5677 for information about which
transactions may be handled this way. Transaction requests submitted by
fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.

OPPENHEIMERFUNDS INTERNET WEBSITE. You can obtain information about the
Fund, as well as your account balance, on the OppenheimerFunds Internet
website, at www.oppenheimerfunds.com. Additionally, shareholders listed
in the account registration (and the dealer of record) may request
certain account transactions through a special section of that website.
To perform account transactions or obtain account information online,
you must first obtain a user I.D. and password on that website. If you
do not want to have Internet account transaction capability for your
account, please call the Transfer Agent at 1.800.225.5677. At times,
the website may be inaccessible or its transaction features may be
unavailable.

REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A or
Class B shares of the Fund at any time, you have up to six months to
reinvest all or a part of the redemption proceeds in Class A shares of
other Oppenheimer funds without paying a sales charge. If you redeem
some or all of your Class A or Class B shares of the Fund during the
Post-Warranty Period, you have up to six months to reinvest all or a
part of the redemption proceeds in Class A shares of this Fund or other
Oppenheimer funds without paying a sales charge. This privilege applies
only to Class A shares that you purchased subject to an initial sales
charge and to Class A or Class B shares on which you paid a contingent
deferred sales charge when you redeemed them. This privilege does not
apply to Class C shares. You must have asked the Distributor for this
privilege when you sent your payment.

How to Sell Shares

You can sell (redeem) some or all of your shares on any regular
business day. Prior to the Maturity Date and during the Post-Warranty
Period, shares are redeemed at their net asset value (which may be less
than your Warranty Amount) minus any applicable contingent deferred
sales charge. For redemptions prior to the Maturity Date and during the
Post-Warranty Period, the net asset value used in determining your
share price is the next one calculated after your redemption order is
received in proper form (which means that it must comply with the
procedures described below) and is accepted by the Transfer Agent.
Redemption of Fund shares prior to the Maturity Date will reduce your
Warranty Amount. The Fund lets you sell your shares by writing a
letter, by wire or by telephone. If you have questions about any of
these procedures, and especially if you are redeeming shares in a
special situation, such as due to the death of the owner or from a
retirement plan account, please call the Transfer Agent first, at
1.800.225.5677, for assistance. Redemption requests received after 4:00
p.m. (or such earlier time as may be required by your financial
intermediary) will be priced at the net asset value at the close of
business on the next business day.

For redemptions made on the Maturity Date (March 3, 2011), the
value used in determining your share price will be the greater of (i)
the then-current net asset value or (ii) your Warranty Amount per
share. See the examples starting on page 24 for help in understanding
how this amount is calculated. Redemptions made prior to the Maturity
Date or during the Post-Warranty Period will not be protected by the
Financial Warranty and the value of your shares will be the
then-current net asset value of the Fund, which may be less than your
Warranty Amount.

Certain Requests Require a Signature Guarantee. To protect you and the
Fund from fraud, the following redemption requests must be in
writing and must include a signature guarantee (although there
may be other situations that also require a signature guarantee):

o You wish to redeem more than $100,000 and receive a check.
o The redemption check is not payable to all shareholders listed on
the account statement.
o The redemption check is not sent to the address of record on your
account statement,
o Shares are being transferred to a Fund account with a different
owner or name.
o Shares are being redeemed by someone (such as an Executor) other
than the owners.

Where Can You Have Your Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including:
o a U.S. bank, trust company, credit union or savings association,
o a foreign bank that has a U.S. correspondent bank,
o a U.S. registered dealer or broker in securities, municipal
securities or government securities, or
o a U.S. national securities exchange, a registered securities
association or a clearing agency.
If you are signing on behalf of a corporation, partnership or
other business or as a fiduciary, you must also include your
title in the signature.

Retirement Plan Accounts. There are special procedures to sell shares
in an OppenheimerFunds retirement plan account. Call the Transfer
Agent for a distribution request form. Special income tax
withholding requirements apply to distributions from retirement
plans. You must submit a withholding form with your redemption
request to avoid delay in getting your money and if you do not
want tax withheld. If your employer holds your retirement plan
account for you in the name of the plan, you must ask the plan
trustee or administrator to request the sale of the Fund shares
in your plan account.

Receiving Redemption Proceeds by Wire. While the Fund normally sends
your money by check, you can arrange to have the proceeds of
shares you sell sent by Federal Funds wire to a bank account you
designate. It must be a commercial bank that is a member of the
Federal Reserve wire system. The minimum redemption you can have
sent by wire is $2,500. There is a $10 fee for each request. To
find out how to set up this feature on your account or to arrange
a wire, call the Transfer Agent at 1.800.225.5677.

HOW DO YOU SELL SHARES BY MAIL? Write a letter of instruction that
includes:
o Your name
o The Fund's name
o Your Fund account number (from your account statement)
o The dollar amount or number of shares to be redeemed
o Any special payment instructions
o Any share certificates for the shares you are selling
o The signatures of all registered owners exactly as the account is
registered, and
o Any special documents requested by the Transfer Agent to assure
proper authorization of the person asking to sell the shares.

Use the following address for Send courier or express mail
requests by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217 Denver, Colorado 80231

HOW DO YOU SELL SHARES BY TELEPHONE? You and your dealer representative
of record may also sell your shares by telephone. To receive the
redemption price calculated on a particular regular business day, your
call must be received by the Transfer Agent by the close of the NYSE
that day, which is normally 4:00 p.m. Eastern time, but may be earlier
on some days. You may not redeem shares held in an
OppenheimerFunds-sponsored qualified retirement plan account or under a
share certificate by telephone.

o To redeem shares through a service representative or
automatically on PhoneLink, call 1.800.225.5677.

Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the proceeds
sent to that bank account.

Are There Limits on Amounts Redeemed by Telephone?
Telephone Redemptions Paid by Check. Up to $100,000 may be redeemed by
telephone in any seven-day period. The check must be payable to
all owners of record of the shares and must be sent to the
address on the account statement. This service is not available
within 30 days of changing the address on an account.

Telephone Redemptions Through AccountLink or by Wire. There are no
dollar limits on telephone redemption proceeds sent to a bank
account designated when you establish AccountLink. Normally the
ACH transfer to your bank is initiated on the business day after
the redemption. You do not receive dividends on the proceeds of
the shares you redeemed while they are waiting to be transferred.

If you have requested Federal Funds wire privileges for your
account, the wire of the redemption proceeds will normally be
transmitted on the next bank business day after the shares are
redeemed. There is a possibility that the wire may be delayed up
to seven days to enable the Fund to sell securities to pay the
redemption proceeds. No dividends are accrued or paid on the
proceeds of shares that have been redeemed and are awaiting
transmittal by wire.

CAN YOU SELL SHARES THROUGH YOUR DEALER? The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge a processing
fee for that service. If your shares are held in the name of your
dealer, you must redeem them through your dealer.

HOW CONTINGENT DEFERRED SALES CHARGES AFFECT REDEMPTIONS. If you
purchased shares subject to a Class A, Class B or Class C contingent
deferred sales charge and redeem any of those shares during the
applicable holding period for the class of shares, the contingent
deferred sales charge will be deducted from the redemption proceeds
(unless you are eligible for a waiver of that sales charge based on the
categories listed in Appendix B to the Statement of Additional
Information and you advise the Transfer Agent of your eligibility for
the waiver when you place your redemption request.)

A contingent deferred sales charge will be based on the lesser of
the net asset value of the redeemed shares at the time of redemption or
the original net asset value. A contingent deferred sales charge is not
imposed on:
o the amount of your account value represented by an increase in
net asset value over the initial purchase price,
o shares purchased by the reinvestment of dividends or capital
gains distributions, or
o shares redeemed in the special circumstances described in
Appendix B to the Statement of Additional Information.
To determine whether a contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order:
1. shares acquired by reinvestment of dividends and capital gains
distributions,
2. shares held for the holding period that applies to the class, and
3. shares held the longest during the holding period.

Contingent deferred sales charges are not charged when you
exchange shares of the Fund for shares of other Oppenheimer funds.
However, if you exchange them within the applicable contingent deferred
sales charge holding period, the holding period will carry over to the
fund whose shares you acquire. Similarly, if during the Offering Period
you acquired Class A, Class B or Class C shares of this Fund by
exchanging shares of another Oppenheimer fund that were still subject
to a contingent deferred sales charge holding period, that holding
period will carry over to this Fund. During the Post-Warranty Period,
if you acquire Class A, Class B or Class C shares of this Fund by
exchanging the same class of shares of another Oppenheimer fund that
are subject to a contingent deferred sales charge holding period, that
holding period will carry over to this Fund.

If you purchased Class A Shares of any one or more of the
Oppenheimer funds aggregating $1 million or more and if you redeem any
of those shares within an 18-month "holding period" measured from the
beginning of the calendar month of their purchase, a contingent
deferred sales charge (called the "Class A contingent deferred sales
charge") may be deducted from the redemption proceeds. That sales
charge will be equal to 1.0% of the lesser of:
o the aggregate net asset value of the redeemed shares at the time
of redemption (excluding shares purchased by reinvestment of
dividends or capital gain distributions) or
o the original net asset value of the redeemed shares.

The Class A contingent deferred sales charge will not exceed the
aggregate amount of the concessions the Distributor paid to your dealer
on all purchases of Class A shares of all Oppenheimer funds you made
that were subject to the Class A contingent deferred sales charge.

If Class B shares are redeemed within six years (72 months) from
the beginning of the calendar month of their purchase, a contingent
deferred sales charge will be deducted from the redemption proceeds.
The Class B contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related services
to the Fund in connection with the sale of Class B shares.

The amount of the contingent deferred sales charge will depend on
the number of years since you invested and the dollar amount being
redeemed, according to the following schedule for the Class B
contingent deferred sales charge holding period:

-------------------------------------------------------------------------------
Contingent Deferred Sales Charge on
Years Since Beginning of Month in Redemptions in That Year
Which Purchase Order was Accepted (As % of Amount Subject to Charge)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
0 - 1 5.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1 - 2 4.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2 - 3 3.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
3 - 4 3.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
4 - 5 2.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
5 - 6 1.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
More than 6 None
-------------------------------------------------------------------------------

In the table, a "year" is a 12-month period. In applying the contingent
deferred sales charge, all purchases are considered to have been made
on the first regular business day of the month in which the purchase
was made.

Automatic Conversion of Class B Shares. Class B shares
automatically convert to Class A shares 88 months after you
purchase them. This conversion feature relieves Class B
shareholders of the asset-based sales charge (which stops 72
months after purchase) that applies to Class B shares under the
Class B Distribution and Service Plan, described above. The
conversion is based on the relative net asset value of the two
classes, and no sales load or other charge is imposed. When any
Class B shares that you hold convert, any other Class B shares
that were acquired by reinvesting dividends and distributions on
the converted shares will also convert to Class A shares. For
further information on the conversion feature and its tax
implications, see "Class B Conversion" in the Statement of
Additional Information.

If Class C shares are redeemed within a holding period of 12
months from the beginning of the calendar month of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. The Class C contingent deferred sales charge is
paid to compensate the Distributor for its expenses of providing
distribution-related services to the Fund in connection with the sale
of Class C shares.

How to Exchange Shares

The Fund does not offer the ability to exchange into the Fund during
the Warranty Period. Because the Fund is not continuously offering its
shares during the Warranty Period, if you exchange your shares of the
Fund for shares of another fund you will not be able to effect an
exchange back into the Fund during the Warranty Period. In addition,
your exchange will be considered a redemption and will reduce your
Warranty Amount.

If you make an exchange prior to the Maturity Date, you may
receive an amount less than your original investment in the Fund. To
exchange shares, you must meet several conditions:

o Shares of the fund selected for exchange must be available for
sale in your state of residence.
o The prospectus of the selected fund must offer the exchange
privilege.
o When you establish an account, you must hold the shares you buy
for at least seven days before you can exchange them. After your
account is open for seven days, you can exchange shares on any
regular business day, subject to the limitations described below.
o You must meet the minimum purchase requirements for the selected
fund.
o Generally, exchanges may be made only between identically
registered accounts, unless all account owners send written
exchange instructions with a signature guarantee.
o Before exchanging into a fund, you must obtain its prospectus and
should read it carefully.

For tax purposes, an exchange of shares of the Fund is considered
a sale of those shares and a purchase of the shares of the fund into
which you are exchanging. An exchange may result in a capital gain or
loss.

You can find a list of the Oppenheimer funds that are currently
available for exchanges in the Statement of Additional Information
or you can obtain a list by calling a service representative at
1.800.225.5677. The funds available for exchange can change from
time to time.

A contingent deferred sales charge (CDSC) is not charged when
you exchange shares of the Fund for shares of another Oppenheimer
fund. However, if you exchange your shares during the applicable
CDSC holding period, the holding period will carry over to the fund
shares that you acquire. Similarly, if you acquired shares of the
Fund in exchange for shares of another Oppenheimer fund that are
subject to a CDSC holding period, that holding period will carry
over to the acquired shares of the Fund. In either of these
situations, a CDSC may be imposed if the acquired shares are
redeemed before the end of the CDSC holding period that applied to
the exchanged shares.

There are a number of other special conditions and
limitations that apply to certain types of exchanges. These
conditions and circumstances are described in detail in the "How to
Exchange Shares" section in the Statement of Additional Information.

HOW DO YOU SUBMIT EXCHANGE REQUESTS? Exchanges may be requested in
writing, by telephone or internet, or by establishing an Automatic
Exchange Plan.

Written Exchange Requests. Send a request letter, signed by all owners
of the account, to the Transfer Agent at the address on the back
cover. Exchanges of shares for which share certificates have been
issued cannot be processed unless the Transfer Agent receives the
certificates with the request letter.

Telephone and Internet Exchange Requests. Telephone exchange requests
may be made either by calling a service representative or by
using PhoneLink by calling 1.800.225.5677. You may submit
internet exchange requests on the OppenheimerFunds internet
website, at www.oppenheimerfunds.com. You must have obtained a
user I.D. and password to make transactions on that website.
Telephone and/or internet exchanges may be made only between
accounts that are registered with the same name(s) and address.
Shares for which share certificates have been issued may not be
exchanged by telephone or the internet.

Automatic Exchange Plan. Shareholders can authorize the Transfer Agent
to exchange a pre-determined amount of shares automatically on a
monthly, quarterly, semi-annual or annual basis.

Please refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.

ARE THERE LIMITATIONS ON FREQUENT PURCHASES, REDEMPTIONS AND EXCHANGES?

Risks from Excessive Purchase, Redemption and Short-Term Exchange
Activity. The OppenheimerFunds exchange privilege affords investors the
ability to switch their investments among Oppenheimer funds if their
investment needs change. However, there are limits on that privilege.
Frequent purchases, redemptions and exchanges of fund shares may
interfere with the Manager's ability to manage the fund's investments
efficiently, increase the fund's transaction and administrative costs
and/or affect the fund's performance, depending on various factors,
such as the size of the fund, the nature of its investments, the amount
of fund assets the portfolio manager maintains in cash or cash
equivalents and the aggregate dollar amount, number and frequency of
trades. If large dollar amounts are involved in exchange and/or
redemption transactions, a fund might be required to sell portfolio
securities at unfavorable times to meet redemption or exchange
requests, and the fund's brokerage or administrative expenses might be
increased.

Therefore, the Manager and the Fund's Board of Trustees have
adopted the following policies and procedures to detect and prevent
frequent and/or excessive exchanges, and/or purchase and redemption
activity, while balancing the needs of investors who seek liquidity
from their investment and the ability to exchange shares as investment
needs change. There is no guarantee that the policies and procedures
described below will be sufficient to identify and deter excessive
short-term trading.

o Timing of Exchanges. Exchanged shares are normally redeemed from
one fund and the proceeds are reinvested in the fund selected for
exchange on the same regular business day on which the Transfer
Agent or its agent (such as a financial intermediary holding the
investor's shares in an "omnibus" or "street name" account)
receives an exchange request that conforms to these policies. The
request must be received by the close of the NYSE that day, which
is normally 4:00 p.m. Eastern time, but may be earlier on some
days, in order to receive that day's net asset value on the
exchanged shares. Exchange requests received after the close of
the NYSE will receive the next net asset value calculated after
the request is received. However, the Transfer Agent may delay
transmitting the proceeds from an exchange for up to five
business days if it determines, in its discretion, that an
earlier transmittal of the redemption proceeds to the receiving
fund would be detrimental to either the fund from which the
exchange is being made or the fund into which the exchange is
being made. The proceeds will be invested in the fund into which
the exchange is being made at the next net asset value calculated
after the proceeds are received. In the event that such a delay
in the reinvestment of proceeds occurs, the Transfer Agent will
notify you or your financial representative.

o Limits on Disruptive Activity. The Transfer Agent may, in its
discretion, limit or terminate trading activity by any person,
group or account that it believes would be disruptive, even if
the activity has not exceeded the policy outlined in this
Prospectus. The Transfer Agent may review and consider the
history of frequent trading activity in all accounts in the
Oppenheimer funds known to be under common ownership or control
as part of the Transfer Agent's procedures to detect and deter
excessive trading activity.

o Exchanges of Client Accounts by Financial Advisers. The Fund and
the Transfer Agent permit dealers and financial intermediaries to
submit exchange requests on behalf of their customers (unless the
customer has revoked that authority). The Distributor and/or the
Transfer Agent have agreements with a number of financial
intermediaries that permit them to submit exchange orders in bulk
on behalf of their clients. Those intermediaries are required to
follow the exchange policies stated in this Prospectus and to
comply with additional, more stringent restrictions. Those
additional restrictions include limitations on the funds
available for exchanges, the requirement to give advance notice
of exchanges to the Transfer Agent, and limits on the amount of
client assets that may be invested in a particular fund. A fund
or the Transfer Agent may limit or refuse bulk exchange requests
submitted by such financial intermediaries if, in the Transfer
Agent's judgment, exercised in its discretion, the exchanges
would be disruptive to any of the funds involved in the
transaction.

o Redemptions of Shares. These exchange policy limits do not apply
to redemptions of shares. Shareholders are permitted to redeem
their shares on any regular business day, subject to the terms of
this Prospectus. Further details are provided under "How to Sell
Shares."

o Right to Refuse Exchange and Purchase Orders. The Distributor
and/or the Transfer Agent may refuse any purchase or exchange
order in their discretion and are not obligated to provide notice
before rejecting an order. The Fund may amend, suspend or
terminate the exchange privilege at any time. You will receive 60
days' notice of any material change in the exchange privilege
unless applicable law allows otherwise.

o Right to Terminate or Suspend Account Privileges. The Transfer
Agent may send a written warning to direct shareholders that the
Transfer Agent believes may be engaging in excessive purchases,
redemptions and/or exchange activity and reserves the right to
suspend or terminate the ability to purchase shares and/or
exchange privileges for any account that the Transfer Agent
determines, in carrying out these policies and in the exercise of
its discretion, has engaged in disruptive or excessive trading
activity, with or without such warning.

o Omnibus Accounts. If you hold your shares of the Fund through a
financial intermediary such as a broker-dealer, a bank, an
insurance company separate account, an investment adviser, an
administrator or trustee of a retirement plan or 529 plan, that
holds your shares in an account under its name (these are
sometimes referred to as "omnibus" or "street name" accounts),
that financial intermediary may impose its own restrictions or
limitations to discourage short-term or excessive trading. You
should consult your financial intermediary to find out what
trading restrictions, including limitations on exchanges, they
may apply.

While the Fund, the Distributor, the Manager and the Transfer
Agent encourage financial intermediaries to apply the Fund's policies
to their customers who invest indirectly in the Fund, the Transfer
Agent may not be able to detect excessive short term trading activity
facilitated by, or in accounts maintained in, the "omnibus" or "street
name" accounts of a financial intermediary. Therefore the Transfer
Agent might not be able to apply this policy to accounts such as (a)
accounts held in omnibus form in the name of a broker-dealer or other
financial institution, or (b) omnibus accounts held in the name of a
retirement plan or 529 plan trustee or administrator, or (c) accounts
held in the name of an insurance company for its separate account(s),
or (d) other accounts having multiple underlying owners but registered
in a manner such that the underlying beneficial owners are not
identified to the Transfer Agent.

However, the Transfer Agent will attempt to monitor overall
purchase and redemption activity in those accounts to seek to identify
patterns that may suggest excessive trading by the underlying owners.
If evidence of possible excessive trading activity is observed by the
Transfer Agent, the financial intermediary that is the registered owner
will be asked to review account activity, and to confirm to the
Transfer Agent and the fund that appropriate action has been taken to
curtail any excessive trading activity. However, the Transfer Agent's
ability to monitor and deter excessive short-term trading in omnibus or
street name accounts ultimately depends on the capability and
cooperation of the financial intermediaries controlling those accounts.

Additional Policies and Procedures. The Fund's Board has adopted the
following additional policies and procedures to detect and prevent
frequent and/or excessive exchanges and purchase and redemption
activity:

o 30-Day Limit. A direct shareholder may exchange some or all of
the shares of the Fund held in his or her account to another
eligible Oppenheimer fund once in a 30 calendar-day period. When
shares are exchanged into a fund account, that account will be
"blocked" from further exchanges into another fund for a period
of 30 calendar days from the date of the exchange. The block will
apply to the full account balance and not just to the amount
exchanged into the account. For example, if a shareholder
exchanged $1,000 from one fund into another fund in which the
shareholder already owned shares worth $10,000, then, following
the exchange, the full account balance ($11,000 in this example)
would be blocked from further exchanges into another fund for a
period of 30 calendar days. A "direct shareholder" is one whose
account is registered on the Fund's books showing the name,
address and tax ID number of the beneficial owner.

o Exchanges Into Money Market Funds. A direct shareholder will be
permitted to exchange shares of a stock or bond fund for shares
of a money market fund that offers an exchange privilege at any
time, even if the shareholder has exchanged shares into the stock
or bond fund during the prior 30 days. However, all of the shares
held in that money market fund would then be blocked from further
exchanges into another fund for 30 calendar days.

o Dividend Reinvestments/B Share Conversions. Reinvestment of
dividends or distributions from one fund to purchase shares of
another fund and the conversion of Class B shares into Class A
shares will not be considered exchanges for purposes of imposing
the 30-day limit.

o Asset Allocation. Third-party asset allocation and rebalancing
programs will be subject to the 30-day limit described above.
Asset allocation firms that want to exchange shares held in
accounts on behalf of their customers must identify themselves to
the Transfer Agent and execute an acknowledgement and agreement
to abide by these policies with respect to their customers'
accounts. "On-demand" exchanges outside the parameters of
portfolio rebalancing programs will be subject to the 30-day
limit. However, investment programs by other Oppenheimer
"funds-of-funds" that entail rebalancing of investments in
underlying Oppenheimer funds will not be subject to these limits.

o Automatic Exchange Plans. Accounts that receive exchange
proceeds through automatic or systematic exchange plans that are
established through the Transfer Agent will not be subject to the
30-day block as a result of those automatic or systematic
exchanges (but may be blocked from exchanges, under the 30-day
limit, if they receive proceeds from other exchanges).

Shareholder Account Rules and Policies

More information about the Fund's policies and procedures for selling
and exchanging shares is contained in the Statement of Additional
Information.
A $12 annual "Minimum Balance Fee" is assessed on each Fund account
with a value of less than $500. The fee is automatically deducted
from each applicable Fund account annually in September. See the
Statement of Additional Information to learn how you can avoid
this fee and for circumstances under which this fee will not be
assessed.
Telephone transaction privileges for redemptions or exchanges may be
modified, suspended or terminated by the Fund at any time. The
Fund will provide you notice whenever it is required to do so by
applicable law. If an account has more than one owner, the Fund
and the Transfer Agent may rely on the instructions of any one
owner. Telephone privileges apply to each owner of the account
and the dealer representative of record for the account unless
the Transfer Agent receives cancellation instructions from an
owner of the account.
The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring
callers to provide tax identification numbers and other account
data or by using PINs, and by confirming such transactions in
writing. The Transfer Agent and the Fund will not be liable for
losses or expenses arising out of telephone instructions
reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer
Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain
of the requirements for redemptions stated in this Prospectus.
Dealers that perform account transactions for their clients by
participating in NETWORKING through the National Securities
Clearing Corporation are responsible for obtaining their clients'
permission to perform those transactions, and are responsible to
their clients who are shareholders of the Fund if the dealer
performs any transaction erroneously or improperly.
The redemption price for shares will vary from day to day because the
value of the securities in the Fund's portfolio fluctuates. The
redemption price, which is the net asset value per share, will
normally differ for each class of shares. If you redeem your
shares before or after the Maturity Date, the redemption value of
your shares may be more or less than their original cost. The
value of your shares on the Maturity Date will equal the greater
of the Warranty Amount or the Fund's then-current net asset value.
Payment for redeemed shares ordinarily is made in cash. It is forwarded
by check, or through AccountLink or by Federal Funds wire (as
elected by the shareholder) within seven days after the Transfer
Agent receives redemption instructions in proper form. However,
under unusual circumstances determined by the Securities and
Exchange Commission, payment may be delayed or suspended. For
accounts registered in the name of a broker-dealer, payment will
normally be forwarded within three business days after
redemption.
The Transfer Agent may delay processing any type of redemption payment
as described under "How to Sell Shares" for recently purchased
shares, but only until the purchase payment has cleared. That
delay may be as much as 10 days from the date the shares were
purchased. That delay may be avoided if you purchase shares by
Federal Funds wire or certified check, or arrange with your bank
to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the Fund if
the account value has fallen below $500 for reasons other than
the fact that the market value of shares has dropped. In some
cases, involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase
orders.
Shares may be "redeemed in kind" under unusual circumstances (such as a
lack of liquidity in the Fund's portfolio to meet redemptions).
This means that the redemption proceeds will be paid with liquid
securities from the Fund's portfolio. If the Fund redeems your
shares in kind, you may bear transaction costs and will bear
market risks until such time as such securities are converted
into cash. However, the Fund has made an election which requires
it to pay a certain portion of redemption proceeds in cash. See
the section entitled "Payments in-Kind" in the Statement of
Additional Information for more information.
Federal regulations may require the Fund to obtain your name, your date
of birth (for a natural person), your residential street address
or principal place of business and your Social Security Number,
Employer Identification Number or other government issued
identification when you open an account. Additional information
may be required in certain circumstances or to open corporate
accounts. The Fund or the Transfer Agent may use this
information to attempt to verify your identity. The Fund may not
be able to establish an account if the necessary information is
not received. The Fund may also place limits on account
transactions while it is in the process of attempting to verify
your identity. Additionally, if the Fund is unable to verify
your identity after your account is established, the Fund may be
required to redeem your shares and close your account.
"Backup withholding" of federal income tax may be applied against
taxable dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund your
correct, certified Social Security or Employer Identification
Number when you sign your application, or if you under-report
your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, the Fund
will mail only one copy of each prospectus, annual and
semi-annual report and annual notice of the Fund's privacy policy
to shareholders having the same last name and address on the
Fund's records. The consolidation of these mailings, called
householding, benefits the Fund through reduced mailing expense.

If you want to receive multiple copies of these materials, you
may call the Transfer Agent at 1.800.225.5677. You may also
notify the Transfer Agent in writing. Individual copies of
prospectuses, reports and privacy notices will be sent to you
commencing within 30 days after the Transfer Agent receives your
request to stop householding.

Dividends, Capital Gains and Taxes

DIVIDENDS. The Fund intends to declare dividends separately for each
class of shares from net investment income on an annual basis and to
pay them to shareholders on a date selected by the Board of Trustees.
Dividends and distributions paid to Class A shares will generally be
higher than dividends for Class B and Class C shares, which normally
have higher expenses than Class A. The Fund has no fixed dividend rate
and cannot guarantee that it will pay any dividends or distributions.

CAPITAL GAINS. The Fund may realize capital gains on the sale of
portfolio securities. If it does, it may make distributions out of any
net short-term or long-term capital gains in December of each year. The
Fund may make supplemental distributions of dividends and capital gains
following the end of its fiscal year. There can be no assurance that
the Fund will pay any capital gains distributions in a particular year.

WHAT CHOICES DO YOU HAVE FOR RECEIVING DISTRIBUTIONS?

Reinvest All Distributions in the Fund. You can elect to reinvest all
dividends and capital gains distributions in additional shares of
the Fund.
Reinvest Dividends or Capital Gains. You can elect to reinvest some
distributions (dividends, short-term capital gains or long-term
capital gains distributions) in the Fund while receiving the
other types of distributions by check or having them sent to your
bank account through AccountLink.
Receive All Distributions in Cash. You can elect to receive a check for
all dividends and capital gains distributions or have them sent
to your bank through AccountLink.
Reinvest Your Distributions in Another OppenheimerFunds Account. You
can reinvest all distributions in the same class of shares of
another OppenheimerFunds account you have established.

Unless otherwise specified, all dividends and distributions will
be automatically reinvested in additional full and fractional shares of
the Fund. If you do not reinvest all of your dividends and capital
gains distributions in the Fund during the Warranty Period, your
Warranty Amount will be reduced.

TAXES. If your shares are not held in a tax-deferred retirement
account, you should be aware of the following tax implications of
investing in the Fund. Distributions are subject to federal income tax
and may be subject to state or local taxes. Dividends paid from
short-term capital gains and net investment income are taxable as
ordinary income. Long-term capital gains are taxable as long-term
capital gains when distributed to shareholders. It does not matter how
long you have held your shares. Whether you reinvest your distributions
in additional shares or take them in cash, the tax treatment is the
same.

The asset allocation process may increase turnover of the Fund's
assets, which may result in the realization of additional gains by the
Fund. It may also result in a larger portion of any net gains being
treated as short-term capital gains, which would be taxed as ordinary
income when distributed to shareholders. As noted above, distributions
of any gains and income will be taxable to shareholders even if those
distributions are reinvested in Fund shares. Shareholders may receive
taxable distributions of income from investments included in the debt
portfolio even in situations where the Fund has capital losses from
investments in the equity portfolio.

The determination of the tax character of any payment of the
Warranty Amount under the Warranty Agreement to the Fund as capital
gain or ordinary income is not free from doubt under federal tax law.
The Fund intends to take the position that its right to receive the
payment under the Warranty Agreement is itself a capital asset, and
that the payment in termination of such right gives rise to capital
gain. Were the Internal Revenue Service to challenge such position, at
least the portion of such payment attributable to capital losses
previously realized by the Fund, and perhaps attributable to the Fund's
unrealized capital losses, should be treated as capital gain. Any such
gain would be offset by otherwise allowable capital losses, if any. To
the extent that the Fund distributes such payment to its shareholders,
a portion of such payment may constitute ordinary income to the
shareholders, provided however, that if the trustees of the Fund should
elect to terminate the Fund at the end of the Warranty Period, it is
anticipated that the shareholders receiving such payment in exchange
for their shares would be treated as receiving a return of capital to
the extent of their basis in the shares of the Fund, and to the extent
such payment exceeds basis, as having capital gain.

Every year the Fund will send you and the IRS a statement showing
the amount of any taxable distribution you received in the previous
year. Any long-term capital gains will be separately identified in the
tax information the Fund sends you after the end of the calendar year.
In January of each year the Fund will mail to you information about
your dividends, distributions and any shares you sold in the previous
calendar year.

The Fund intends each year to qualify as a "regulated investment
company" under the Internal Revenue Code, but reserves the right not to
qualify. It qualified during its last fiscal year. The Fund, as a
regulated investment company, will not be subject to federal income
taxes on any of its income, provided that it satisfies certain income,
diversification and distribution requirements.

Remember, There May be Taxes on Transactions. Because the Fund's share
prices fluctuate, you may have a capital gain or loss when you
sell or exchange your shares. A capital gain or loss is the
difference between the price you paid for the shares and the
price you received when you sold them. Any capital gain is
subject to capital gains tax.
Returns of Capital Can Occur. In certain cases, distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders.

The Fund will invest in zero coupon U.S. Treasury bonds and other
debt securities that are issued at a discount or provide for deferred
interest. Even though the Fund receives no actual interest payments on
these securities, the Fund will be deemed to receive income equal,
generally, to a portion of the excess of the face value of the
securities over their issue price ("original issue discount") each year
that the securities are held. Since the original issue discount income
earned by the Fund in a taxable year may not be represented by cash
income, the Fund may have to dispose of securities, which it might
otherwise have continued to hold, to generate cash in order to satisfy
its distribution requirements if shareholders request cash
distributions.

This information is only a summary of certain federal income tax
information about your investment. You should consult with your tax
advisor about the effect of an investment in the Fund on your
particular tax situation.

Financial Highlights of the Fund

The Financial Highlights Table shown below is presented to help you
understand the Fund's financial performance since inception. Certain
information reflects financial results for a single Fund share. The
total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has
been audited by Deloitte & Touche LLP, the Fund's independent
registered public accounting firm, whose report, along with the Fund's
financial statements, is included in the Statement of Additional
Information, which is available on request.

FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------

CLASS A YEAR ENDED AUGUST 31, 2006 2005 2004 1
-------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
-------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.32 $ 29.50 $ 30.00
-------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .43 2 .48 2 .25
Net realized and unrealized gain (loss) .55 .90 (.75)
-----------------------------------
Total from investment operations .98 1.38 (.50)
-------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.51) (.56) --
Tax return of capital distribution from net realized income (.01) -- --
-----------------------------------
Total dividends and/or distributions to shareholders (.52) (.56) --
-------------------------------------------------------------------------------------------------
Net asset value, end of period $ 30.78 $ 30.32 $ 29.50
===================================

-------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 3.28% 4.69% (1.67)%
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $63,781 $84,724 $100,995
-------------------------------------------------------------------------------------------------
Average net assets (in thousands) $73,030 $94,553 $ 80,924
-------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 1.40% 1.60% 1.29%
Total expenses 1.46% 5 1.46% 5 1.34% 5
Expenses after payments and waivers
and reduction to custodian expenses 1.17% 1.23% 0.99%
-------------------------------------------------------------------------------------------------
Portfolio turnover rate 74% 61% 118%

1. For the period from November 10, 2003 (commencement of operations) to August
31, 2004.

2. Per share amounts calculated based on the average shares outstanding during
the period.

3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.

4. Annualized for periods of less than one full year.

5. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 1.75%
Year Ended August 31, 2005 1.69%
Period Ended August 31, 2004 1.54%

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS B YEAR ENDED AUGUST 31, 2006 2005 2004 1
------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.12 $ 29.32 $ 30.00
------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .18 2 .23 2 .10
Net realized and unrealized gain (loss) .56 .90 (.78)
-----------------------------------
Total from investment operations .74 1.13 (.68)
------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.27) (.33) --
Tax return of capital distribution from net realized
income (.01) -- --
-----------------------------------
Total dividends and/or distributions to shareholders (.28) (.33) --
------------------------------------------------------------------------------------------
Net asset value, end of period $ 30.58 $ 30.12 $ 29.32
===================================

------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 2.46% 3.88% (2.27)%
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $76,285 $92,317 $100,646
------------------------------------------------------------------------------------------
Average net assets (in thousands) $84,876 $97,514 $ 81,999
------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.59% 0.78% 0.49%
Total expenses 2.25% 5 2.26% 5 2.12% 5
Expenses after payments and waivers
and reduction to custodian expenses 1.96% 2.03% 1.77%
------------------------------------------------------------------------------------------
Portfolio turnover rate 74% 61% 118%

1. For the period from November 10, 2003 (commencement of operations) to August
31, 2004.

2. Per share amounts calculated based on the average shares outstanding during
the period.

4. Annualized for periods of less than one full year.

5. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 2.54%
Year Ended August 31, 2005 2.49%
Period Ended August 31, 2004 2.32%

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

FINANCIAL HIGHLIGHTS Continued
--------------------------------------------------------------------------------

CLASS C YEAR ENDED AUGUST 31, 2006 2005 2004 1
-----------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.13 $ 29.33 $ 30.00
-----------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .20 2 .26 2 .09
Net realized and unrealized gain (loss) .55 .88 (.76)
----------------------------------
Total from investment operations .75 1.14 (.67)
-----------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.21) (.34) --
Tax return of capital distribution from net realized
income (.02) -- --
----------------------------------
Total dividends and/or distributions to shareholders (.23) (.34) --
-----------------------------------------------------------------------------------------
Net asset value, end of period $ 30.65 $ 30.13 $ 29.33
==================================

-----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 2.51% 3.90% (2.23)%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $31,681 $49,066 $69,188
-----------------------------------------------------------------------------------------
Average net assets (in thousands) $39,713 $60,338 $54,330
-----------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.67% 0.88% 0.50%
Total expenses 2.22% 5 2.23% 5 2.08% 5
Expenses after payments and waivers
and reduction to custodian expenses 1.93% 2.00% 1.73%
-----------------------------------------------------------------------------------------
Portfolio turnover rate 74% 61% 118%

1. For the period from November 10, 2003 (commencement of operations) to August
31, 2004.

2. Per share amounts calculated based on the average shares outstanding during
the period.

4. Annualized for periods of less than one full year.

5. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 2.51%
Year Ended August 31, 2005 2.46%
Period Ended August 31, 2004 2.28%

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

Financial Highlights of the Underlying Fund

Because the Fund may invest a significant amount of its assets in the
Underlying Fund, the Financial Highlights Table on the following page
is presented to help you understand the Underlying Fund's Class Y share
financial performance for the past five fiscal years. The total returns
in the table represent the rate that an investor would have earned (or
lost) on an investment in the Underlying Fund (assuming reinvestment of
all dividends and distributions). This information has been audited by
Deloitte & Touche LLP, the Fund's and the Underlying Fund's independent
registered public accounting firm, whose report, along with the
Underlying Fund's financial statements, is incorporated by reference in
the Fund's Statement of Additional Information, which is available on
request.

FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------

CLASS A YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 36.18 $ 32.78 $ 29.62 $ 27.90 $ 32.15
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .35 1 .47 1 .26 .22 .16
Net realized and unrealized gain (loss) 2.96 3.34 3.10 1.69 (4.29)
----------------------------------------------------------------------------------
Total from investment operations 3.31 3.81 3.36 1.91 (4.13)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.37) (.41) (.20) (.19) (.07)
Distributions from net realized gain -- -- -- -- (.05)
----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.37) (.41) (.20) (.19) (.12)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 39.12 $ 36.18 $ 32.78 $ 29.62 $ 27.90
==================================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 9.19% 11.68% 11.37% 6.93% (12.90)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $7,680,186 $7,810,714 $7,384,256 $7,033,312 $6,443,983
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $7,845,096 $7,759,230 $7,521,103 $6,310,359 $7,203,226
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.93% 1.36% 0.75% 0.87% 0.52%
Total expenses 0.92% 4 0.92% 4 0.93% 4,5 0.97% 4 0.99% 4
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 84% 79% 76% 94% 78%

1. Per share amounts calculated based on the average shares outstanding during
the period.

2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.

3. Annualized for periods of less than one full year.

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

FINANCIAL HIGHLIGHTS Continued
--------------------------------------------------------------------------------

CLASS B YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 34.99 $ 31.67 $ 28.68 $ 27.04 $ 31.34
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .05 1 .20 1 (.21) (.13) (.20)
Net realized and unrealized gain (loss) 2.86 3.21 3.20 1.77 (4.05)
----------------------------------------------------------------------------------
Total from investment operations 2.91 3.41 2.99 1.64 (4.25)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.03) (.09) -- -- --
Distributions from net realized gain -- -- -- -- (.05)
----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.03) (.09) -- -- (.05)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 37.87 $ 34.99 $ 31.67 $ 28.68 $ 27.04
==================================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 8.32% 10.79% 10.43% 6.06% (13.58)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,453,679 $1,968,829 $2,558,206 $2,941,765 $3,510,800
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,685,648 $2,295,269 $2,884,434 $2,964,666 $4,607,653
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.13% 0.59% (0.10)% 0.04% (0.25)%
Total expenses 1.71% 4 1.72% 4 1.78% 4,5 1.81% 4 1.75% 4
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 84% 79% 76% 94% 78%

1. Per share amounts calculated based on the average shares outstanding during
the period.

3. Annualized for periods of less than one full year.

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS C YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 34.98 $ 31.71 $ 28.69 $ 27.03 $ 31.33
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .07 1 .21 1 (.03) -- (.11)
Net realized and unrealized gain (loss) 2.85 3.22 3.05 1.66 (4.14)
---------------------------------------------------------------------------------
Total from investment operations 2.92 3.43 3.02 1.66 (4.25)
----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) (.16) -- -- --
Distributions from net realized gain -- -- -- -- (.05)
---------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.09) (.16) -- -- (.05)
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 37.81 $ 34.98 $ 31.71 $ 28.69 $ 27.03
=================================================================================

----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 8.36% 10.83% 10.53% 6.14% (13.58)%
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,107,962 $1,206,335 $1,241,930 $1,188,826 $1,198,517
----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,163,337 $1,250,845 $1,278,659 $1,111,131 $1,432,566
----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.18% 0.62% (0.01)% 0.09% (0.24)%
Total expenses 1.67% 4 1.67% 4 1.70% 4,5 1.74% 4 1.75% 4
----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 84% 79% 76% 94% 78%

1. Per share amounts calculated based on the average shares outstanding during
the period.

3. Annualized for periods of less than one full year.

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

FINANCIAL HIGHLIGHTS Continued
-------------------------------------------------------------------------------

CLASS N YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002
--------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 35.71 $ 32.39 $ 29.33 $ 27.72 $ 32.09
--------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .24 1 .35 1 .15 .20 .12
Net realized and unrealized gain (loss) 2.92 3.30 3.05 1.65 (4.31)
----------------------------------------------------------------
Total from investment operations 3.16 3.65 3.20 1.85 (4.19)
--------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.28) (.33) (.14) (.24) (.13)
Distributions from net realized gain -- -- -- -- (.05)
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.28) (.33) (.14) (.24) (.18)
--------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 38.59 $ 35.71 $ 32.39 $ 29.33 $ 27.72
================================================================

--------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 8.87% 11.30% 10.93% 6.78% (13.15)%
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $207,339 $177,463 $150,955 $ 79,188 $ 43,464
--------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $194,639 $168,866 $122,478 $ 60,950 $ 28,141
--------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.63% 1.02% 0.38% 0.65% 0.28%
Total expenses 1.22% 1.26% 1.31% 1.23% 1.24%
Expenses after payments and waivers
and reduction to custodian expenses 1.22% 1.26% 1.31% 1.18% 1.24%
--------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 84% 79% 76% 94% 78%

1. Per share amounts calculated based on the average shares outstanding during
the period.

3. Annualized for periods of less than one full year.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS Y YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002
--------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 36.38 $ 32.93 $ 29.75 $ 28.02 $ 32.28
--------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .52 1 .64 1 .34 .11 .19
Net realized and unrealized gain (loss) 2.96 3.34 3.13 1.86 (4.28)
----------------------------------------------------------------
Total from investment operations 3.48 3.98 3.47 1.97 (4.09)
--------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.53) (.53) (.29) (.24) (.12)
Distributions from net realized gain -- -- -- -- (.05)
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.53) (.53) (.29) (.24) (.17)
--------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 39.33 $ 36.38 $ 32.93 $ 29.75 $ 28.02
================================================================

--------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 9.63% 12.15% 11.69% 7.11% (12.74)%
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $668,823 $483,532 $570,991 $441,460 $225,298
--------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $594,018 $496,349 $558,130 $242,029 $227,835
--------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.38% 1.82% 1.07% 1.01% 0.74%
Total expenses 0.49% 0.53% 0.60% 0.87% 0.92%
Expenses after payments and waivers
and reduction to custodian expenses 0.49% 0.53% 0.60% 0.83% 0.78%
--------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 84% 79% 76% 94% 78%

1. Per share amounts calculated based on the average shares outstanding during
the period.

3. Annualized for periods of less than one full year.

INFORMATION AND SERVICES

For More Information on Oppenheimer Principal Protected Main Street
Fund II(R)
The following additional information about the Fund is available
without charge upon request:

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional
information about the Fund's investment policies, risks, and
operations. It is incorporated by reference into this Prospectus (which
means it is legally part of this Prospectus).

ANNUAL AND SEMI-ANNUAL REPORTS. Additional information about the Fund's
investments and performance is available in the Fund's Annual and
Semi-Annual Reports to shareholders. The Annual Report includes a
discussion of market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal
year.

How to Get More Information
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, the notice explaining the Fund's privacy policy
and other information about the Fund or your account:

------------------------------------------------------------------------------
By Telephone: Call OppenheimerFunds Services toll-free:
1.800.CALL OPP (225.5677)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
By Mail: Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
------------------------------------------------------------------------------
------------------------------------------------------------------------------
On the Internet: You can request these documents by e-mail or
through the OppenheimerFunds website. You may
also read or download certain documents on the
OppenheimerFunds website at:
www.oppenheimerfunds.com
------------------------------------------------------------------------------

Information about the Fund including the Statement of Additional
Information can be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public
Reference Room may be obtained by calling the SEC at 1.202.942.8090.
Reports and other information about the Fund are available on the EDGAR
database on the SEC's Internet website at www.sec.gov. Copies may be
obtained after payment of a duplicating fee by electronic request at
the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's
Public Reference Section, Washington, D.C. 20549-0102.
No one has been authorized to provide any information about the Fund or
to make any representations about the Fund other than what is contained
in this Prospectus. This Prospectus is not an offer to sell shares of
the Fund, nor a solicitation of an offer to buy shares of the Fund, to
any person in any state or other jurisdiction where it is unlawful to
make such an offer.

The Fund's SEC File No. 811-21414 The Fund's shares are
distributed by:
PR0711.001.1206 [logo] OppenheimerFunds
Distributor, Inc.

Printed on recycled paper

APPENDIX TO THE PROSPECTUS OF
OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND II(R)

Graphic material included in the Prospectus of Oppenheimer
Principal Protected Main Street Fund II ("the Fund") includes "Annual
Total Returns (Class A) (as of 12/31 each year)"

A bar chart is included in the Prospectus of the Fund depicting
the annual total returns of a hypothetical investment in Class A shares
of the Fund since inception of the Class A shares, without deducting
sales charges. Set forth below are the relevant data points that will
appear in the bar chart:

Calendar Year Ended: Annual Total Returns
12/31/04 1.69%
12/31/05 2.07%

Oppenheimer Principal Protected Main Street Fund II(R)

6803 South Tucson Way, Centennial, Colorado 80112-3924
1.800.CALL OPP (225.5677)

Statement of Additional Information dated December 15, 2006

This Statement of Additional Information is not a prospectus. This document
contains additional information about the Fund and supplements information in
the Prospectus dated December 15, 2006. It should be read together with the
Prospectus, which may be obtained by writing to the Fund's Transfer Agent,
OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217, or by
calling the Transfer Agent at the toll-free number shown above, or by
downloading it from the OppenheimerFunds Internet website at
www.oppenheimerfunds.com.

Contents
Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks......2
The Fund's Investment Policies.........................................2
The Asset Allocation Process...........................................3
Other Investment Restrictions.........................................10
Disclosure of Portfolio Holdings......................................12
How the Fund is Managed...................................................16
Organization and History..............................................16
Board of Trustees and Oversight Committees............................17
Trustees and Officers of the Fund.....................................18
The Manager...........................................................27
Brokerage Policies of the Fund............................................30
Distribution and Service Plans............................................33
Payments to Fund Intermediaries...........................................37
Performance of the Fund...................................................40

About Your Account
How to Sell Shares........................................................48
How to Exchange Shares....................................................51
Dividends, Capital Gains and Taxes........................................54
Additional Information About the Fund.....................................59

Financial Information About the Fund
Report of Independent Registered Public Accounting Firm...................59
Financial Statements......................................................60

Appendix A: Industry Classifications.....................................A-1
Appendix B: Special Sales Charge Arrangements and Waivers................B-1
Appendix C: Information About the Underlying Fund........................C-1

About the Fund

Additional Information About the Fund's Investment Policies and Risks

The investment objective, the principal investment policies and the
main risks of the Fund are described in the Prospectus. This Statement of
Additional Information contains supplemental information about those policies
and risks as well as information about any non-principal investment policies
and the attendant risks not described in the prospectus and the types of
securities that the Fund's investment Manager, OppenheimerFunds, Inc., can
select for the Fund. Additional information is also provided about the
strategies that the Fund can use to try to achieve its objective.

The Fund's Investment Policies. The composition of the Fund's portfolio and
the techniques and strategies that the Fund's Manager can use in selecting
portfolio securities will vary over time. The "Warranty Period" began March
3, 2004 and will end March 3, 2011 or the next following business day (the
"Maturity Date"). The investment objective of the Fund during the Warranty
Period is to seek capital preservation in order to attempt to make sure that
the value of each shareholder's account on the Maturity Date will be no less
than the value of that shareholder's account on the last day of the Offering
Period, less sales charges, extraordinary expenses and other amounts not
covered by the "Warranty Agreement" (the "Warranty Amount"). The Fund seeks
high total return as a secondary objective. There can be no assurance that
the Fund will achieve its objective. The Fund's investment objective during
the "Post-Warranty Period," the period immediately following the Maturity
Date, is high total return. This section supplements the disclosure in the
Fund's Prospectus and provides additional information on the Fund's
investment policies or restrictions to the extent permitted under the
Financial Warranty Agreement, dated January 20, 2004 (the "Warranty
Agreement"), among the Fund, the Manager and Merrill Lynch Bank USA.
Restrictions or policies stated as a maximum percentage of the Fund's assets
are only applied immediately after a portfolio investment to which the policy
or restriction is applicable (other than the limitations on borrowing and
illiquid securities). Accordingly, any later increase or decrease resulting
from a change in values, net assets or other circumstances will not be
considered in determining whether the investment complies with the Fund's
restrictions and policies.

Under normal market conditions, during the Warranty Period the Fund's
assets are allocated between an equity component, consisting exclusively of
Class Y shares of the Oppenheimer Main Street Fund (the "Underlying Fund"),
and a fixed income component, normally consisting primarily of zero-coupon
U.S. government securities. However, as explained more fully in the
prospectus, under certain circumstances, the Fund's assets may be invested
primarily or even exclusively in U.S. government securities.

Merrill Lynch Bank USA ("MLBUSA" or the "Warranty Provider") is a
wholly-owned subsidiary of Merrill Lynch & Co., Inc. MLBUSA is licensed as an
industrial bank pursuant to the laws of the State of Utah. MLBUSA is
regulated by certain Federal and state agencies and is examined by those
agencies. MLBUSA may hedge its risks under the Warranty Agreement with one or
more counterparties, including with an affiliate of MLBUSA (which may include
the calculation agent under the Warranty Agreement). MLBUSA is not required
to hedge its risk under the Warranty Agreement and may choose not to do so.
Whether MLBUSA attempts to hedge its risk under the Warranty Agreement or
not, it is the sole entity responsible for making payments to the Fund, if
any, under the Warranty Agreement.

The Asset Allocation Process. In pursuing the Fund's investment objective
during the Warranty Period, the Manager allocates the Fund's assets between
the equity and fixed income components of the portfolio. The Fund did not
employ an asset allocation model during the Offering Period and will not do
so during the Post-Warranty Period.

The prevailing level of interest rates and the volatility of the equity
markets will significantly influence the allocation of Fund assets between
the equity component and the fixed income component. The Manager will monitor
the allocation of the Fund's assets on a daily basis.

The asset allocation process will also be affected by the Manager's
ability to manage the Underlying Fund. If the market value of the Underlying
Fund increases, a smaller portion of the Fund's assets would be allocated to
the fixed income component. On the other hand, if the market value of the
Underlying Fund decreases, a higher portion of the Fund's assets would have
to be allocated to the fixed income component, and the ability of the Fund to
participate in any subsequent upward movement in the equity market would be
reduced.

The Warranty Agreement contains a mathematical formula which provides
the maximum amount of the Fund's assets that may be invested in the equity
component on any given day during the Warranty Period. That percentage
allocation to the equity component can be as high as 100% and as low as zero.
Accordingly, the Warranty Agreement could limit the way that the Manager
manages the Fund during the Warranty Period in response to changing market
conditions.

In allocating the Fund's assets between the equity and fixed income
components, the Manager will base its decision on the formula set forth in
the Warranty Agreement. The formula will help establish both the initial
allocation of the Fund's assets and on a daily basis will reevaluate the
Fund's then maximum permitted allocation in the equity component. The
objective of the formula is to preserve the principal of the Fund, primarily
through allocations to the fixed income component. The formula takes into
account a number of factors, including, but not limited to:
o The market value of the Fund's assets as compared to the Warranty
Amount;
o The prevailing level of interest rates;
o Equity market volatility; and
o The length of time remaining until the Maturity Date.

The model may allocate between 0% to 100% of the Fund's assets to the
equity component. However, initially a significant portion of the Fund's
assets will be allocated to the fixed income component. It is also possible
that 100% of the Fund's assets will be allocated to the debt component during
the Warranty Period.

The basic terms of the asset allocation model were determined prior to
the Fund entering into the Warranty Agreement with MLBUSA. MLBUSA reviewed
the asset allocation model in determining whether it was prepared to offer
the Financial Warranty to the Fund and negotiated some modifications to
manage its financial risk. MLBUSA has no right to require any modification to
the structure of the asset allocation formula during the Warranty Period, but
has discretion in certain limited circumstances to adjust certain variables
in the formula. Because the model impacts MLBUSA's financial exposure, MLBUSA
has a right to approve any changes that the Fund wishes to make to the model
during the Warranty Period. MLBUSA has informational rights regarding the
model's allocation and the Fund's portfolio during the Warranty Period, but
these rights are intended to enable MLBUSA to monitor its financial exposure.
Under the terms of the Warranty Agreement, the Fund is subject to certain
investment parameters during the Warranty Period. The Fund has also agreed to
be bound by various covenants. If the Fund's assets are not managed in
accordance with the parameters set forth in the Warranty Agreement or if the
Fund breaches these covenants, the Fund's assets could be allocated entirely
to the fixed income portfolio for the remainder of the Warranty Period, or
MLBUSA may terminate the Warranty Agreement.

The Financial Warranty. The prospectus contains a detailed description of the
Warranty Agreement. The "Financial Warranty" that the Warranty Provider
issued is a contractual obligation to make a payment to the Fund in the event
there is a shortfall between the Warranty Amount and the then-current net
asset value of the Fund on the Maturity Date ("Shortfall"). The Financial
Warranty is not a guarantee and therefore the availability of the Financial
Warranty on the Maturity Date will be conditioned upon the Manager and the
Fund satisfying their respective obligations under the Warranty Agreement.
Should the Fund and/or the Manager fail to satisfy their respective
obligations under the Warranty Agreement, the Warranty Provider is permitted
to terminate the Financial Warranty and thus terminate its obligation, if
any, to make any payment to the Fund on the Maturity Date. Shareholders also
bear the risk that the Warranty Provider will become insolvent or otherwise
fail to or become unable to satisfy its payment obligation to the Fund, if
any, under the Financial Warranty. If either event were to occur,
shareholders' investment in the Fund would no longer be protected by the
Financial Warranty, which means their shares may be worth less than their
anticipated Warranty Amount. The Fund's Board of Trustees will periodically
review the financial statements of the Warranty Provider. In the event that
the financial condition of the Warranty Provider has deteriorated beyond
certain thresholds, the Trustees will determine whether there is a
substantial likelihood that the Warranty Provider will be unable to satisfy
its obligations under the Warranty Agreement. Under such circumstances the
Board may, but is not obligated to, replace the Warranty Provider.

In the event the Manager acts with negligence, recklessness, bad faith,
willful misconduct or fraud and the Fund's net asset value is below a set
limit, the Manager will be required to make a payment under the Warranty
Agreement in an amount equal to the amount of any reduction in the Fund's net
asset value below a set limit that is directly or indirectly attributable to
the Manager's conduct. Additionally, in the event the Manager is required to
allocate the Fund's assets to the debt component and fails to do so and such
failure results in the Fund's net asset value falling below a set limit, the
Manager will be required to pay to the Warranty Provider an amount equal to
the shortfall due to the Fund's assets not being so invested. The Warranty
Provider may also terminate the Financial Warranty for other reasons, as
discussed in the Prospectus and this Statement of Additional Information.

The Warranty Agreement imposes certain conditions and requirements on
the Fund and the Manager. Failure to satisfy those conditions and
requirements, which are described in detail in the Prospectus, gives the
Warranty Provider the ability to (i) reduce the amount of the Fund's assets
invested in shares of the Underlying Fund, (ii) require 100% of the Fund's
assets to be invested in U.S. government securities, or (iii) terminate the
Warranty Agreement, depending on the condition or requirement. The Manager
will monitor the conditions and requirements of the Warranty Agreement on a
daily basis to ensure that the Fund and the Manager satisfy those conditions
and requirements. In certain circumstances, the Warranty Agreement provides
that in the case of certain deficiencies, the Fund may have a specified
period of time to cure the deficiency. In the case of other deficiencies, the
Warranty Provider has the right, in its sole discretion, to either direct the
Manager to allocate all of the Fund's assets to the debt component, deliver
to the Fund's Custodian pre-signed instructions from the Manager instructing
the Custodian to immediately allocate all of the Fund's assets to the debt
component or change one of the variables in the formula which would have the
effect of increasing the portion of the Fund's assets allocated to the debt
component or in certain circumstances terminate the Warranty Agreement. The
Warranty Provider will rely on the Manager as well as on the Fund's Custodian
bank for the information necessary to monitor the Fund's and/or the Manager's
compliance with the terms of the Warranty Agreement. The attendant risks to
the Fund and shareholders are if the Manager or the Custodian bank fails to
provide the information required by the Warranty Agreement, in which case the
Warranty Provider may require the Fund to invest exclusively in U.S.
government securities.

On the Maturity Date, if there is a shortfall between the Warranty
Amount and the Fund's then-current net asset value, the Warranty Provider
will be required to make a payment to the Fund in the amount of the
Shortfall. The Shortfall amount will be determined per class of shares and
then the specific shortfall amount per class of shares will be allocated to
the respective class. Once the dollar amount of Shortfall is allocated per
class, that amount will then be divided evenly among the outstanding shares
of the class to apply on a shareholder basis. The Fund will then provide
those shareholders who redeem their Fund shares on the Maturity Date with
their respective Warranty Amount.

During the Warranty Period, the Fund may purchase securities or engage
in investment techniques set forth in the following sections.

|X| Investments in Equity Securities. The Fund's investments in equity
securities will consist exclusively of Class Y shares of the Oppenheimer Main
Street Fund - the Underlying Fund. The Underlying Fund does not limit its
investments in equity securities to issuers having a market capitalization of
a specified size or range, and therefore can invest in securities of small-,
mid- and large-capitalization issuers. At times, the Underlying Fund can
focus its equity investments in securities of one or more capitalization
ranges, based upon the Manager's judgment of where the best market
opportunities are to seek the Underlying Fund's objective. At times, the
market may favor or disfavor securities of issuers of a particular
capitalization range. Securities of small capitalization issuers may be
subject to greater price volatility in general than securities of larger
companies. Therefore, if the Underlying Fund is focusing on or has
substantial investments in smaller capitalization companies at times of
market volatility, the Underlying Fund's share prices may fluctuate more than
that of funds focusing on larger capitalization issuers. Further information
about the Underlying Fund is included under "Information About the Underlying
Fund" in Appendix C to this Statement of Additional Information. The
Underlying Fund's Prospectus and Statement of Additional Information describe
in detail the Underlying Fund's investment policies, risks, management,
investment restrictions, strategies and types of securities in which it may
invest, and contains other information about the Underlying Fund. The
Prospectus, Statement of Additional Information and annual and semi-annual
reports of the Underlying Fund are available without charge upon request by
calling 1.800.525.7048.

|X| Investments in Bonds and Other Debt Securities. The Fund will
invest in U.S. government securities to seek its investment objective. In
general, debt securities are subject to two types of risk: credit risk and
interest rate risk.

o Credit Risk. Credit risk relates to the ability of the issuer to
meet interest or principal payments or both as they become due. The fixed
income component of the Fund's portfolio consists of U.S. government
securities. U.S. government securities, although unrated, are generally
considered to be equivalent to securities in the highest rating categories.
Investment-grade bonds are bonds rated at least "Baa" by Moody's Investors
Service, Inc. ("Moody's"), or at least "BBB" by Standard & Poor's Rating
Service, a division of the McGraw-Hill Companies, Inc. ("S&P") or Fitch, Inc.
("Fitch"), or that have comparable ratings by another nationally-recognized
rating organization.

o Interest Rate Risk. Interest rate risk refers to the fluctuations
in value of debt securities resulting from the inverse relationship between
price and yield. For example, an increase in general interest rates will tend
to reduce the market value of already-issued debt securities, and a decline
in general interest rates will tend to increase their value. In addition,
debt securities having longer maturities tend to offer higher yields, but are
subject to potentially greater fluctuations in value from changes in interest
rates than obligations having shorter maturities.

Fluctuations in the market value of debt securities after the Fund buys
them will not affect the interest income payable on those securities (unless
the security pays interest at a variable rate pegged to interest rate
changes). However, those price fluctuations will be reflected in the
valuations of the securities, and therefore the Fund's net asset values will
be affected by those fluctuations.

|X| U.S. Government Securities. U.S. government securities the Fund
buys will include non-callable general obligations of the U.S. Treasury
backed by the full faith and credit of the U.S. government or of any of the
following U.S. government agencies, instrumentalities or government sponsored
enterprises: Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation, Federal Home Loan Bank, Resolution Funding Corporation,
Financing Corporation and Tennessee Valley Authority, provided such
securities are rated no less than "AAA" by Standard & Poor's Rating Services
or "Aaa" by Moody's Investors Service, Inc.

o U.S. Treasury Obligations. These include Treasury bills (which
have maturities of one year or less when issued), Treasury notes (which have
maturities of more than one year and up to ten years when issued), and
Treasury bonds (which have maturities of more than ten years when issued).
Treasury securities are backed by the full faith and credit of the United
States as to timely payments of interest and repayments of principal. Other
U.S. Treasury obligations the Fund can buy include U. S. Treasury securities
that have been "stripped" by a Federal Reserve Bank, zero-coupon U.S.
Treasury securities described below.

o Obligations Issued or Guaranteed by U.S. Government Agencies or
Instrumentalities. These include direct obligations and mortgage-related
securities that have different levels of credit support from the government.
The Fund may invest in, Government National Mortgage Association pass-through
mortgage certificates (called "Ginnie Maes"), which are supported by the full
faith and credit of the U.S. government.

|X| Zero-Coupon Securities. The Fund can buy zero-coupon and
delayed-interest securities. The Fund can buy U.S. Treasury notes or bonds
that have been stripped of their interest coupons, U.S. Treasury bills issued
without interest coupons, and certificates representing interests in stripped
securities.

Zero-coupon securities do not make periodic interest payments and are
sold at a deep discount from their face value. The buyer recognizes a rate of
return determined by the gradual appreciation of the security, which is
redeemed at face value on a specified maturity date. This discount depends on
the time remaining until maturity, as well as prevailing interest rates, the
liquidity of the security and the credit quality of the issuer. The discount
typically decreases as the maturity date approaches. Some zero-coupon
securities are convertible, in that they are zero-coupon securities until a
predetermined date, at which time they convert to a security with a specified
coupon rate.

Because zero-coupon securities pay no interest and typically compound
semi-annually at the rate fixed at the time of their issuance, their value is
generally more volatile than the value of other debt securities. Their value
may fall more dramatically than the value of interest-bearing securities when
interest rates rise. When prevailing interest rates fall, zero-coupon
securities tend to rise more rapidly in value because they have a fixed rate
of return.

The Fund's investment in zero-coupon securities may cause the Fund to
recognize income and make distributions to shareholders before it receives
any cash payments on the zero-coupon investment. To generate cash to satisfy
those distribution requirements, the Fund may have to sell portfolio
securities that it otherwise might have continued to hold or to use cash
flows from other sources such as the sale of Fund shares.

|X| Money Market Instruments. The following is a brief description of
the types of the U.S. dollar-denominated money market securities the Fund can
invest in. Money market securities are high-quality, short-term debt
instruments that may be issued by the U.S. government, corporations, banks or
other entities. They may have fixed, variable or floating interest rates.
During the Offering Period the Fund invested its assets in:

o U.S. Government Securities. These include obligations issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, described above.

o Bank Obligations. The Fund can buy time deposits, certificates of
deposit and bankers' acceptances. They must be:
o obligations issued or guaranteed by a domestic bank (including
a foreign branch of a domestic bank) having total assets of at
least U.S. $1 billion, or
o obligations of a foreign bank with total assets of at least U.S. $1
billion.

"Banks" include commercial banks, savings banks and savings and loan
associations, which may or may not be members of the Federal Deposit
Insurance Corporation.

o Commercial Paper. The Fund can invest in commercial paper if it is
rated within the top three rating categories of Standard & Poor's and Moody's
or other rating organizations.

If the paper is not rated, it may be purchased if the Manager
determines that it is comparable to rated commercial paper in the top three
rating categories of national rating organizations.

The Fund can buy commercial paper, including U.S. dollar-denominated
securities of foreign branches of U.S. banks, issued by other entities if the
commercial paper is guaranteed as to principal and interest by a bank,
government or corporation whose certificates of deposit or commercial paper
may otherwise be purchased by the Fund.

During the Warranty Period, the Fund may invest in bank deposits,
commercial paper and U.S. government securities (excluding U.S. government
zero coupon securities), having a remaining maturity of 90 days or less. The
bank deposits will include demand and time deposits in, certificates of
deposit of, and bankers' acceptances issued by, any U.S. depository
institution or trust company. The bank deposits and commercial paper must
have a credit rating of at least "P-1" by Moody's Investors Service, Inc. and
at least "A-1" by Standard & Poor's Rating Services, and the issuer thereof
must have at the time of such investment a long-term credit rating of at
least "Aa3" by Moody's or at least "AA" by S&P.

|X| Borrowing. The Fund may borrow for temporary or emergency purposes
only to the extent necessary to meet redemption requests after using all cash
held by the Fund to meet such redemption requests, other than cash necessary
to pay Fund fees and expenses. Currently, under the Investment Company Act of
1940 ("Investment Company Act"), a mutual fund may borrow only from banks and
the maximum amount it may borrow is up to one-third of its total assets
(including the amount borrowed less its liabilities, other than borrowings),
except that a fund may borrow up to 5% of its total assets for temporary
purposes from any person. Under the Investment Company Act, there is a
rebuttable presumption that a loan is temporary if it is repaid within 60
days and not extended or renewed. As a matter of fundamental policy, the Fund
is authorized to borrow up to the limits set forth in the Investment Company
Act. During periods of substantial borrowings, the value of the Fund's assets
would be reduced due to the added expense of interest on borrowed monies. The
Fund is authorized to borrow, and to pledge assets to secure such borrowings,
up to the maximum extent permissible under the Investment Company Act. Any
such borrowing will be made only pursuant to the requirements of the
Investment Company Act and will be made only to the extent that the value of
each Fund's assets less its liabilities, other than borrowings, is equal to
at least 300% of all borrowings including the proposed borrowing. If the
value of the Fund's assets, so computed, should fail to meet the 300% asset
coverage requirement, the Fund is required, within three days to reduce its
bank debt to the extent necessary to meet such requirement and may have to
sell a portion of its investments at a time when independent investment
judgment would not dictate such sale. Interest on money borrowed is an
expense the Fund would not otherwise incur, so that it may have little or no
net investment income during periods of substantial borrowings. Since
substantially all of the Fund's assets fluctuate in value, but borrowing
obligations are fixed when the Fund has outstanding borrowings, the net asset
value per share of the Fund correspondingly will tend to increase and
decrease more when the Fund's assets increase or decrease in value than would
otherwise be the case.

The Fund will pay interest on these loans, and that interest expense
will raise the overall expenses of the Fund and reduce its returns. If it
does borrow, its expenses will be greater than comparable funds that do not
borrow for leverage. Additionally, the Fund's net asset value per share might
fluctuate more than that of funds that do not borrow. Currently, the Fund
does not contemplate using this technique, but if it does so, it will not
likely do so to a substantial degree.

|X| Portfolio Turnover. "Portfolio turnover" describes the rate at
which the Fund traded its portfolio securities during its previous fiscal
year. For example, if a fund sold all of its securities during the year, its
portfolio turnover rate would have been 100%. The Fund's portfolio turnover
rate will fluctuate from year to year, and the Fund is likely to have a
portfolio turnover rate of 100% or more. Increased portfolio turnover creates
higher brokerage and transaction costs for the Fund, which may reduce its
overall performance. Additionally, the realization of capital gains from
selling portfolio securities may result in distributions of taxable long-term
capital gains to shareholders, since the Fund will normally distribute all of
its capital gains realized each year, to avoid excise taxes under the
Internal Revenue Code. As a result of the Fund's dynamic asset allocation
model, the Fund may have a higher portfolio turnover rate than other mutual
funds.

|X| Investment in Other Investment Companies. As stated above, the Fund
can invest in the Class Y shares of Oppenheimer Main Street Fund, subject to
the limits set forth in the Investment Company Act or any exemption therefrom
that apply to those types of investments and any percentage limit
established, from time to time, by the asset allocation formula described in
the Warranty Agreement. As a shareholder of an investment company, the Fund
will be subject to its ratable share of that investment company's expenses,
including its advisory and administration expenses.

|X| Loans of Portfolio Securities. The Fund may lend its portfolio
securities pursuant to policies approved by the Fund's Board. It may do so to
try to provide income or to raise cash for liquidity purposes. These loans
are limited to not more than 331/3% of the value of the Fund's net assets.

The Fund has entered into a Securities Lending Agreement (the
"Securities Lending Agreement") with JPMorgan Chase Bank, N.A. ("JPMorgan
Chase"). Under the Securities Lending Agreement and applicable regulatory
requirements (which are subject to change), the collateral for such loans
must, on each business day, be at least equal to the value of the loaned
securities and must consist of cash, bank letters of credit or securities of
the U.S. Government (or its agencies or instrumentalities), or other cash
equivalents in which the Fund is permitted to invest. To be acceptable as
collateral, a bank letter of credit must obligate the bank to pay to JPMorgan
Chase, as agent, amounts demanded by the Fund if the demand meets the terms
of the letter. Both the issuing bank and the terms of the letter of credit
must be satisfactory to JPMorgan Chase and the Fund. The terms of the loans
must also meet applicable tests under the Internal Revenue Code and permit
the Fund to reacquire loaned securities on five business days' notice or in
time to vote on any material matters. The Securities Lending Agreement may be
terminated by either JPMorgan Chase or the Fund on 30 days' written notice.

Pursuant to the Securities Lending Agreement, the Fund will
receive a percentage of all annual net income (i.e., net of rebates to the
borrower and certain other approved expenses) from securities lending
transactions. Such net income includes earnings from the investment of any
cash collateral received from a borrower and loan fees paid or payable by a
borrower in connection with loans secured by collateral other than cash.

There are some risks in connection with securities lending,
including possible delays in receiving additional collateral from the
borrower to secure a loan or delays in recovering the loaned securities if
the borrower defaults. JPMorgan Chase has agreed, in general, to guarantee
the obligations of borrowers to return loaned securities to the Fund and to
be responsible for expenses relating to securities lending. The Fund,
however, will be responsible for risks associated with the investment of cash
collateral, including the risk of a default by the issuer of a security in
which cash collateral has been invested. If that occurs, the Fund may incur
additional costs in seeking to obtain the collateral or may lose the amount
of the collateral investment. The Fund may also lose money if the value of
the investments purchased with cash collateral decreases.

Other Investment Restrictions

|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the
Fund has adopted to govern its investments that can be changed only by the
vote of a "majority" of the Fund's outstanding voting securities. Under the
Investment Company Act, a "majority" vote is defined as the vote of the
holders of the lesser of:
o 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or
o more than 50% of the outstanding shares.

The Fund's investment objective is a fundamental policy. Other policies
described in the Prospectus or this Statement of Additional Information are
"fundamental" only if they are identified as such. The Fund's Board of
Trustees can change non-fundamental policies without shareholder approval.
However, significant changes to investment policies will be described in
supplements or updates to the Prospectus or this Statement of Additional
Information, as appropriate. The Fund's most significant investment policies
are described in the Prospectus.

The Underlying Fund's investment objective is a fundamental policy.
Other policies described in the Underlying Fund's Prospectus or its Statement
of Additional Information and in Appendix C to this Statement of Additional
Information are "fundamental" only if they are identified as such. The
Underlying Fund's Board of Directors can change non-fundamental policies
without shareholder approval. However, significant changes to investment
policies will be described in supplements or updates to the Underlying Fund's
Prospectus or Statement of Additional Information, as appropriate. The
Underlying Fund's most significant investment policies are described in its
Prospectus as well as in the Oppenheimer Principal Protected Main Street Fund
II Prospectus.

|X| Does the Fund Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Fund.

o The Fund cannot concentrate investments. That means it cannot invest
25% or more of its total assets in any industry. However, there is no
limitation on investments in affiliated funds and obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities.

o The Fund cannot invest in commodities. However, the Fund can buy and
sell any of the hedging instruments permitted by any of its other policies.
It does not matter if the hedging instrument is considered to be a commodity
or commodity contract.

o The Fund cannot invest in real estate or in interests in real
estate. However, the Fund can purchase securities of issuers holding real
estate or interests in real estate (including securities of real estate
investment trusts).

o The Fund cannot underwrite securities of other companies. A
permitted exception is in case it is deemed to be an underwriter under the
Securities Act of 1933 when reselling any securities held in its own
portfolio.

o The Fund cannot issue "senior securities," but this does not
prohibit certain investment activities for which assets of the Fund are
designated as segregated, or margin, collateral or escrow arrangements are
established, to cover the related obligations. Examples of those activities
include borrowing money, reverse repurchase agreements, delayed-delivery and
when-issued arrangements for portfolio securities transactions, and contracts
to buy or sell derivatives, hedging instruments, options or futures.

o The Fund cannot borrow money, except to the extent permitted under the
Investment Company Act, the rules or regulations thereunder or any exemption
therefrom that is applicable to the Fund, as such statutes, rules or
regulations may be amended or interpreted from time to time.

o The Fund cannot make loans except (a) through lending of securities,
(b) through the purchase of debt instruments or similar evidences of
indebtedness, (c) through an interfund lending program with other affiliated
funds, and (d) through repurchase agreements.

o The Fund cannot buy securities issued or guaranteed by any one issuer
if more than 5% of its total assets would be invested in securities of that
issuer or it would then own more than 10% of that issuer's voting securities.
This limit applies to 75% of the Fund's total assets. The limit does not
apply to securities issued by the U.S. Government or any of its agencies or
instrumentalities, or securities of other affiliated investment companies.

|X| Does the Underlying Fund Have Additional Fundamental Policies? The
following investment restrictions are Fundamental policies of the Underlying
Fund.

o The Underlying Fund cannot concentrate investments. That means it
cannot invest 25% or more of its total assets in any industry. However, there
is no limitation on investments in U.S. government securities.

o The Underlying Fund cannot invest in commodities. However, the
Underlying Fund can buy and sell any of the hedging instruments permitted by
any of its other policies. It does not matter if the hedging instrument is
considered to be a commodity or commodity contract.

o The Underlying Fund cannot invest in real estate or in interests in
real estate. However, the Underlying Fund can purchase securities of issuers
holding real estate or interests in real estate (including securities of real
estate investment trusts).

o The Underlying Fund cannot underwrite securities of other companies.
A permitted exception is in case it is deemed to be an underwriter under the
Securities Act of 1933 when reselling any securities held in its own
portfolio.

o The Underlying Fund cannot issue "senior securities," but this does
not prohibit certain investment activities for which assets of the Fund are
designated as segregated, or margin, collateral or escrow arrangements are
established, to cover the related obligations. Examples of those activities
include borrowing money, reverse repurchase agreements, delayed-delivery and
when-issued arrangements for portfolio securities transactions, and contracts
to buy or sell derivatives, hedging instruments, options or futures.

o The Underlying Fund cannot borrow money in excess of 33 1/3% of the
value of its total assets (including the amount borrowed). The Underlying
Fund may borrow only from banks and/or affiliated investment companies. With
respect to this fundamental policy, the Underlying Fund can borrow only if it
maintains a 300% ratio of assets to borrowings at all times in the manner set
forth in the Investment Company Act.

o The Underlying Fund cannot make loans except (a) through lending of
securities, (b) through the purchase of debt instruments or similar evidences
of indebtedness, and (c) through repurchase agreements

o The Underlying Fund cannot buy securities issued or guaranteed by any
one issuer if more than 5% of its total assets would be invested in
securities of that issuer or it would then own more than 10% of that issuer's
voting securities. This limit applies to 75% of the Underlying Fund's total
assets. The limit does not apply to securities issued by the U.S. Government
or any of its agencies or instrumentalities, or securities of other
investment companies.

Unless the Prospectus or this Statement of Additional Information
states that a percentage restriction applies on an ongoing basis, it applies
only at the time an investment (except in the case of borrowing and
investments in illiquid securities) is made. The Fund and the Underlying Fund
need not sell securities to meet the percentage limits if the value of the
investment increases in proportion to the size of the Fund or Underlying Fund.

For purposes of the policy not to concentrate investments as described
above, the Fund and the Underlying Fund have each adopted as a
non-fundamental policy the industry classifications set forth in Appendix A
to its Statement of Additional Information. The Fund and the Underlying Fund
do not intend to concentrate its investments in a group of industries.

Disclosure of Portfolio Holdings. The Fund has adopted policies and
procedures concerning the dissemination of information about its portfolio
holdings by employees, officers and/or directors of the Manager, Distributor
and Transfer Agent. These policies are designed to assure that non-public
information about portfolio securities is distributed only for a legitimate
business purpose, and is done in a manner that (a) conforms to applicable
laws and regulations and (b) is designed to prevent that information from
being used in a way that could negatively affect the Fund's investment
program or enable third parties to use that information in a manner that is
harmful to the Fund.

o Public Disclosure. The Fund's portfolio holdings are made publicly
available no later than 60 days after the close of each of the Fund's
fiscal quarters in semi-annual and annual reports to shareholders, or
in its Statements of Investments on Form N-Q, which are publicly
available at the SEC. In addition, the top 10 or more holdings are
posted on the OppenheimerFunds' website at www.oppenheimerfunds.com in
the "Fund Profiles" section. Other general information about the Fund's
portfolio investments, such as portfolio composition by asset class,
industry, country, currency, credit rating or maturity, may also be
posted with a 15-day lag.

Until publicly disclosed, the Fund's portfolio holdings are
proprietary, confidential business information. While recognizing the
importance of providing Fund shareholders with information about their Fund's
investments and providing portfolio information to a variety of third parties
to assist with the management, distribution and administrative process, the
need for transparency must be balanced against the risk that third parties
who gain access to the Fund's portfolio holdings information could attempt to
use that information to trade ahead of or against the Fund, which could
negatively affect the prices the Fund is able to obtain in portfolio
transactions or the availability of the securities that portfolio managers
are trading on the Fund's behalf.

The Manager and its subsidiaries and affiliates, employees, officers,
and directors, shall neither solicit nor accept any compensation or other
consideration (including any agreement to maintain assets in the Fund or in
other investment companies or accounts managed by the Manager or any
affiliated person of the Manager) in connection with the disclosure of the
Fund's non-public portfolio holdings. The receipt of investment advisory fees
or other fees and compensation paid to the Manager and its subsidiaries
pursuant to agreements approved by the Fund's Board shall not be deemed to be
"compensation" or "consideration" for these purposes. It is a violation of
the Code of Ethics for any covered person to release holdings in
contravention of portfolio holdings disclosure policies and procedures
adopted by the Fund.

A list of the top 10 or more portfolio securities holdings (based on
invested assets), listed by security or by issuer, as of the end of each
month may be disclosed to third parties (subject to the procedures below) no
sooner than 15 days after month-end.

Except under special limited circumstances discussed below, month-end
lists of the Fund's complete portfolio holdings may be disclosed no sooner
than 30-days after the relevant month-end, subject to the procedures below.
If the Fund's complete portfolio holdings have not been disclosed publicly,
they may be disclosed pursuant to special requests for legitimate business
reasons, provided that:

o The third-party recipient must first submit a request for release of
Fund portfolio holdings, explaining the business reason for the request;
o Senior officers (a Senior Vice President or above) in the Manager's
Portfolio and Legal departments must approve the completed request for
release of Fund portfolio holdings; and
o The third-party recipient must sign the Manager's portfolio holdings
non-disclosure agreement before receiving the data, agreeing to keep
information that is not publicly available regarding the Fund's
holdings confidential and agreeing not to trade directly or indirectly
based on the information.

The Fund's complete portfolio holdings positions may be released to the
following categories of entities or individuals on an ongoing basis, provided
that such entity or individual either (1) has signed an agreement to keep
such information confidential and not trade on the basis of such information
or (2) is subject to fiduciary obligations, as a member of the Fund's Board,
or as an employee, officer and/or director of the Manager, Distributor, or
Transfer Agent, or their respective legal counsel, not to disclose such
information except in conformity with these policies and procedures and not
to trade for his/her personal account on the basis of such information:

o Employees of the Fund's Manager, Distributor and Transfer Agent who
need to have access to such information (as determined by senior
officers of such entity),
o The Fund's independent registered public accounting firm,
o Members of the Fund's Board and the Board's legal counsel,
o The Fund's custodian bank,
o A proxy voting service designated by the Fund and its Board,
o Rating/ranking organizations (such as Lipper and Morningstar),
o Portfolio pricing services retained by the Manager to provide portfolio
security prices, and
o Dealers, to obtain bids (price quotations if securities are not priced
by the Fund's regular pricing services).

Portfolio holdings information of the Fund may be provided, under
limited circumstances, to brokers and/or dealers with whom the Fund trades
and/or entities that provide investment coverage and/or analytical
information regarding the Fund's portfolio, provided that there is a
legitimate investment reason for providing the information to the broker,
dealer or other entity. Month-end portfolio holdings information may, under
this procedure, be provided to vendors providing research information and/or
analytics to the fund, with at least a 15-day delay after the month end, but
in certain cases may be provided to a broker or analytical vendor with a 1-2
day lag to facilitate the provision of requested investment information to
the manager to facilitate a particular trade or the portfolio manager's
investment process for the Fund. Any third party receiving such information
must first sign the Manager's portfolio holdings non-disclosure agreement as
a pre-condition to receiving this information.

Portfolio holdings information (which may include information on
individual securities positions or multiple securities) may be provided to
the entities listed below (1) by portfolio traders employed by the Manager in
connection with portfolio trading, and (2) by the members of the Manager's
Security Valuation Group and Accounting Departments in connection with
portfolio pricing or other portfolio evaluation purposes:

o Brokers and dealers in connection with portfolio transactions
(purchases and sales)
o Brokers and dealers to obtain bids or bid and asked prices (if
securities held by the Fund are not priced by the fund's regular
pricing services)
o Dealers to obtain price quotations where the fund is not identified as
the owner

Portfolio holdings information (which may include information on the
Fund's entire portfolio or individual securities therein) may be provided by
senior officers of the Manager or attorneys on the legal staff of the
Manager, Distributor, or Transfer Agent, in the following circumstances:

o Response to legal process in litigation matters, such as responses to
subpoenas or in class action matters where the Fund may be part of the
plaintiff class (and seeks recovery for losses on a security) or a
defendant,
o Response to regulatory requests for information (the SEC, NASD, state
securities regulators, and/or foreign securities authorities, including
without limitation requests for information in inspections or for
position reporting purposes),
o To potential sub-advisers of portfolios (pursuant to confidentiality
agreements),
o To consultants for retirement plans for plan sponsors/discussions at
due diligence meetings (pursuant to confidentiality agreements),
o Investment bankers in connection with merger discussions (pursuant to
confidentiality agreements)

Portfolio managers and analysts may, subject to the Manager's policies
on communications with the press and other media, discuss portfolio
information in interviews with members of the media, or in due diligence or
similar meetings with clients or prospective purchasers of Fund shares or
their financial intermediary representatives.

The Fund's shareholders may, under unusual circumstances (such as a
lack of liquidity in the Fund's portfolio to meet redemptions), receive
redemption proceeds of their Fund shares paid as pro rata shares of
securities held in the Fund's portfolio. In such circumstances, disclosure of
the Fund's portfolio holdings may be made to such shareholders.

The Chief Compliance Officer (the "CCO") of the Fund and the Manager,
Distributor, and Transfer Agent shall oversee the compliance by the Manager,
Distributor, Transfer Agent, and their personnel with these policies and
procedures. At least annually, the CCO shall report to the Fund's Board on
such compliance oversight and on the categories of entities and individuals
to which disclosure of portfolio holdings of the Funds has been made during
the preceding year pursuant to these policies. The CCO shall report to the
Fund's Board any material violation of these policies and procedures during
the previous calendar quarter and shall make recommendations to the Board as
to any amendments that the CCO believes are necessary and desirable to carry
out or improve these policies and procedures.

The Manager and/or the Fund have entered into ongoing arrangements to
make available information about the Fund's portfolio holdings. One or more
of the Oppenheimer funds may currently disclose portfolio holdings
information based on ongoing arrangements to the following parties:

A.G. Edwards & Sons
ABG Securities
ABN AMRO
Advest
AG Edwards
American Technology Research
Auerbach Grayson
Banc of America Securities
Barclays
Baseline
Bear Stearns
Belle Haven
Bloomberg
BNP Paribas
BS Financial Services
Buckingham Research Group
Caris & Co.
CIBC World Markets
Citigroup
Citigroup Global Markets
Collins Stewart
Craig-Hallum Capital Group LLC
Credit Agricole Cheuvreux N.A. Inc.
Credit Suisse First Boston
Daiwa Securities
Davy
Deutsche Bank
Deutsche Bank Securities
Dresdner Kleinwort Wasserstein
Emmet & Co
Empirical Research
Enskilda Securities
Essex Capital Markets
Exane BNP Paribas
Factset
Fidelity Capital Markets
Fimat USA Inc.
First Albany
First Albany Corporation
Fixed Income Securities
Fortis Securities
Fox-Pitt, Kelton
Friedman, Billing, Ramsey
Fulcrum Global Partners
Garp Research
George K Baum & Co.
Goldman
Goldman Sachs
HSBC
HSBC Securities Inc
ING Barings
ISI Group
Janney Montgomery
Jefferies
Jeffries & Co.
JP Morgan
JP Morgan Securities
JPP Eurosecurities
Keefe, Bruyette & Woods
Keijser Securities
Kempen & Co. USA Inc.
Kepler Equities/Julius Baer Sec
KeyBanc Capital Markets
Leerink Swan
Legg Mason
Lehman
Lehman Brothers
Lipper
Loop Capital Markets
MainFirst Bank AG
Makinson Cowell US Ltd
Maxcor Financial
Merrill
Merrill Lynch
Midwest Research
Mizuho Securities
Morgan Stanley
Morningstar
Natexis Bleichroeder
Ned Davis Research Group
Nomura Securities
Pacific Crest
Pacific Crest Securities
Pacific Growth Equities
Petrie Parkman
Pictet
Piper Jaffray Inc.
Plexus
Prager Sealy & Co.
Prudential Securities
Ramirez & Co.
Raymond James
RBC Capital Markets
RBC Dain Rauscher
Research Direct
Robert W. Baird
Roosevelt & Cross
Russell Mellon
Ryan Beck & Co.
Sanford C. Bernstein
Scotia Capital Markets
SG Cowen & Co.
SG Cowen Securities
Soleil Securities Group
Standard & Poors
Stone & Youngberg
SWS Group
Taylor Rafferty
Think Equity Partners
Thomas Weisel Partners
UBS
Wachovia
Wachovia Corp
Wachovia Securities
Wescott Financial
William Blair
Yieldbook

How the Fund is Managed

Organization and History. The Fund, a series of Oppenheimer Principal
Protected Trust II, is an open-end, diversified management investment company
with an unlimited number of authorized shares of beneficial interest. The
Fund was organized as a Massachusetts business trust in August 2003.

|X| Classes of Shares. The Trustees are authorized, without shareholder
approval, to create new series and classes of shares, to reclassify unissued
shares into additional series or classes and to divide or combine the shares
of a class into a greater or lesser number of shares without changing the
proportionate beneficial interest of a shareholder in the Fund. Shares do not
have cumulative voting rights, preemptive rights or subscription rights.
Shares may be voted in person or by proxy at shareholder meetings.

The Fund currently has three classes of shares: Class A, Class B, and
Class C. All classes invest in the same investment portfolio. Each class of
shares:

o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o will generally have a different net asset value,
o will generally have separate voting rights on matters in which
interests of one class are different from interests of another
class, and
o votes as a class on matters that affect that class alone.

Shares are freely transferable, and each share of each class has one
vote at shareholder meetings, with fractional shares voting proportionally,
on matters submitted to a vote of shareholders. Each share of the Fund
represents an interest in the Fund proportionately equal to the interest of
each other share of the same class.

|X| Meetings of Shareholders. As a Massachusetts business trust, the Fund
is not required to hold, and does not plan to hold, regular annual meetings
of shareholders, but may hold shareholder meetings from time to time on
important matters or when required to do so by the Investment Company Act or
other applicable law. Shareholders have the right, upon a vote or
declaration in writing of two-thirds of the outstanding shares of the Fund,
to remove a Trustee or to take other action described in the Fund's
Declaration of Trust.

The Trustees will call a meeting of shareholders to vote on the removal
of a Trustee upon the written request of the record holders of 10% of its
outstanding shares. If the Trustees receive a request from at least 10
shareholders stating that they wish to communicate with other shareholders to
request a meeting to remove a Trustee, the Trustees will then either make the
Fund's shareholder list available to the applicants or mail their
communication to all other shareholders at the applicants' expense. The
shareholders making the request must have been shareholders for at least six
months and must hold shares of the Fund valued at $25,000 or more or
constituting at least 1% of the Fund's outstanding shares. The Trustees may
also take other action as permitted by the Investment Company Act.

|X| Shareholder and Trustee Liability. The Fund's Declaration of Trust
contains an express disclaimer of shareholder or Trustee liability for the
Fund's obligations. It also provides for indemnification and reimbursement of
expenses out of the Fund's property for any shareholder held personally
liable for its obligations. The Declaration of Trust also states that upon
request, the Fund shall assume the defense of any claim made against a
shareholder for any act or obligation of the Fund and shall satisfy any
judgment on that claim. Massachusetts law permits a shareholder of a business
trust (such as the Fund) to be held personally liable as a "partner" under
certain circumstances. However, the risk that a Fund shareholder will incur
financial loss from being held liable as a "partner" of the Fund is limited
to the relatively remote circumstances in which the Fund would be unable to
meet its obligations.

The Fund's contractual arrangements state that any person doing
business with the Fund (and each shareholder of the Fund) agrees under its
Declaration of Trust to look solely to the assets of the Fund for
satisfaction of any claim or demand that may arise out of any dealings with
the Fund and that the Trustees shall have no personal liability to any such
person, to the extent permitted by law.

Board of Trustees and Oversight Committees. The Fund is governed by a Board
of Trustees, which is responsible for protecting the interests of
shareholders under Massachusetts law. The Trustees meet periodically
throughout the year to oversee the Fund's activities, review its performance,
and review the actions of the Manager.

The Board of Trustees has an Audit Committee, a Review Committee and a
Governance Committee. Each committee is comprised solely of Trustees who are
not "interested persons" under the Investment Company Act (the "Independent
Trustees"). The members of the Audit Committee are Edward L. Cameron
(Chairman), George C. Bowen, Robert J. Malone and F. William Marshall, Jr. The
Audit Committee held eight meetings during the Fund's fiscal year ended August
31, 2006. The Audit Committee furnishes the Board with recommendations
regarding the selection of the Fund's independent registered public accounting
firm (also referred to as the "independent Auditors"). Other main functions of
the Audit Committee, outlined in the Audit Committee Charter, include, but are
not limited to: (i) reviewing the scope and results of financial statement
audits and the audit fees charged; (ii) reviewing reports from the Fund's
independent Auditors regarding the Fund's internal accounting procedures and
controls; (iii) reviewing reports from the Manager's Internal Audit
Department; (iv) reviewing certain reports from and meet periodically with
the Funds' Chief Compliance Officer; (v) maintaining a separate line of
communication between the Fund's independent Auditors and the Independent
Trustees; (vi) reviewing the independence of the Fund's independent Auditors;
and (vii) pre-approving the provision of any audit or non-audit services by
the Fund's independent Auditors, including tax services, that are not
prohibited by the Sarbanes-Oxley Act, to the Fund, the Manager and certain
affiliates of the Manager.

The Review Committee is comprised solely of Independent Trustees. The
members of the Review Committee are Jon S. Fossel (Chairman), Robert G. Avis,
Sam Freedman and Beverly L. Hamilton. The Review Committee held six meetings
during the Fund's fiscal year ended August 31, 2006. Among other duties, as
set forth in the Review Committee's Charter, the Review Committee reports and
makes recommendations to the Board concerning the fees paid to the Fund's
transfer agent and the Manager and the services provided to the Fund by the
transfer agent and the Manager. The Review Committee also reviews the Fund's
investment performance as well as the policies and procedures adopted by the
Fund to comply with the Investment Company Act and other applicable law.

The Governance Committee is comprised solely of Independent Trustees.
The members of the Governance Committee are Robert J. Malone (Chairman),
William Armstrong, Beverly L. Hamilton and F. William Marshall, Jr. The
Governance Committee held six meetings during the Fund's fiscal year ended
August 31, 2006. The Governance Committee has adopted a charter setting forth
its duties and responsibilities. Among other duties, the Governance Committee
reviews and oversees the Fund's governance guidelines, the adequacy of the
Fund's Codes of Ethics and the nomination of Trustees, including Independent
Trustees. The Governance Committee has adopted a process for shareholder
submission of nominees for board positions. Shareholders may submit names of
individuals, accompanied by complete and properly supported resumes, for the
Governance Committee's consideration by mailing such information to the
Governance Committee in care of the Fund. The Governance Committee may
consider such persons at such time as it meets to consider possible nominees.
The Governance Committee, however, reserves sole discretion to determine
which candidates for Trustees and Independent Trustees it will recommend to
the Board and/or shareholders and it may identify candidates other than those
submitted by Shareholders. The Governance Committee may, but need not,
consider the advice and recommendation of the Manager and/or its affiliates
in selecting nominees. The full Board elects new Trustees except for those
instances when a shareholder vote is required.

Shareholders who desire to communicate with the Board should address
correspondence to the Board or an individual Board member and may submit
their correspondence electronically at www.oppenheimerfunds.com under the
caption "contact us" or by mail to the Fund at the address below.

Trustees and Officers of the Fund. Except for Mr. Murphy, each of the
Trustees is an Independent Trustee. All of the Trustees are also trustees or
directors of the following Oppenheimer/Centennial funds (referred to as
"Board II Funds"):

Oppenheimer Principal Protected
Oppenheimer Cash Reserves Trust III
Oppenheimer Capital Income Fund Oppenheimer Real Asset Fund
Oppenheimer Senior Floating Rate
Oppenheimer Champion Income Fund Fund
Oppenheimer Equity Fund, Inc. Oppenheimer Strategic Income Fund
Oppenheimer Integrity Funds Oppenheimer Variable Account Funds
Oppenheimer International Bond Fund Panorama Series Fund, Inc.
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Centennial California Tax Exempt
Oppenheimer Main Street Opportunity Fund Trust
Oppenheimer Main Street Small Cap Fund Centennial Government Trust
Oppenheimer Municipal Fund Centennial Money Market Trust
Centennial New York Tax Exempt
Oppenheimer Principal Protected Trust Trust
Oppenheimer Principal Protected Trust II Centennial Tax Exempt Trust

Present or former officers, directors, trustees and employees (and
their immediate family members) of the Fund, the Manager and its affiliates,
and retirement plans established by them for their employees are permitted to
purchase Class A shares of the Fund and the other Oppenheimer funds at net
asset value without sales charge. The sales charge on Class A shares is
waived for that group because of the reduced sales efforts realized by the
Distributor.

Messrs. Gillespie, Manioudakis, Murphy, Petersen, Schadt, Szilagyi,
Vandehey, Wixted and Zack and Mss. Bloomberg and Ives, who are officers of
the Fund, hold the same offices with one or more of the other Board II Funds.
As of November 6, 2006 the Trustees and officers of the Fund, as a group,
owned of record or beneficially less than 1%, of any class A shares of the
Fund. The foregoing statement does not reflect ownership of shares held of
record by an employee benefit plan for employees of the Manager, other than
the shares beneficially owned under that plan by the officers of the Board II
Funds. In addition, none of the Independent Trustees (nor any of their
immediate family members) owns securities of either the Manager or the
Distributor or of any entity directly or indirectly controlling, controlled
by or under common control with the Manager or the Distributor of the Board
II Funds.

Biographical Information. The Trustees and officers, their positions
with the Fund, length of service in such position(s), and principal
occupations and business affiliations during at least the past five years are
listed in the charts below. The charts also include information about each
Trustee's beneficial share ownership in the Fund and in all of the registered
investment companies that the Trustee oversees in the Oppenheimer family of
funds ("Supervised Funds"). The address of each Trustee in the chart below is
6803 S. Tucson Way, Centennial, Colorado 80112-3924. Each Trustee serves for
an indefinite term, or until his or her resignation, retirement, death or
removal.

---------------------------------------------------------------------------------------
Independent Trustees
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Name, Position(s) Principal Occupation(s) During the Past 5 Dollar Aggregate
Dollar
Range of
y Shares
Range of Beneficially
Shares Owned in
with the Fund, Years; Other Trusteeships/Directorships Beneficiall All
Length of Service, Held; Number of Portfolios in the Fund Owned in Supervised
Age Complex Currently Overseen the Fund Funds
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
As of December 31,
2005
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
William L. President, Colorado Christian University None Over
Armstrong, (since 2006);Chairman of the following $100,000
Chairman of the private mortgage banking companies: Cherry
Board of Trustees Creek Mortgage Company (since 1991),
since 2003, Centennial State Mortgage Company (since
Trustee since 1999 1994), and The El Paso Mortgage Company
Age: 69 (since 1993); Chairman of the following
private companies: Ambassador Media
Corporation (since 1984) and Broadway
Ventures (since 1984); Director of the
following: Helmerich & Payne, Inc. (oil
and gas drilling/production company)
(since 1992), Campus Crusade for Christ
(since 1991) and The Lynde and Harry
Bradley Foundation, Inc. (non-profit
organization) (since 2002); former
Chairman of the following: Transland
Financial Services, Inc. (private mortgage
banking company) (1997-2003), Great
Frontier Insurance (insurance agency)
(1995-2000), Frontier Real Estate, Inc.
(residential real estate brokerage)
(1994-2000) and Frontier Title (title
insurance agency) (1995-2000); former
Director of the following: UNUMProvident
(insurance company) (1991-2004), Storage
Technology Corporation (computer equipment
company) (1991-2003) and International
Family Entertainment (television channel)
(1992-1997); U.S. Senator (January
1979-January 1991). Oversees 37
portfolios in the OppenheimerFunds complex.
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---------------------------------------------------------------------------------------
Robert G. Avis, Director and President of A.G. Edwards None Over
Trustee since 1993 Capital, Inc. (General Partner of private $100,000
Age: 75 equity funds) (until February 2001);
Chairman, President and Chief Executive
Officer of A.G. Edwards Capital, Inc.
(until March 2000); Director of A.G.
Edwards & Sons, Inc. (brokerage company)
(until 2000) and A.G. Edwards Trust
Company (investment adviser) (until 2000);
Vice Chairman and Director of A.G.
Edwards, Inc. (until March 1999); Vice
Chairman of A.G. Edwards & Sons, Inc.
(until March 1999); Chairman of A.G.
Edwards Trust Company (until March 1999)
and A.G.E. Asset Management (investment
adviser) (until March 1999). Oversees 37
portfolios in the OppenheimerFunds complex.
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---------------------------------------------------------------------------------------
George C. Bowen, Assistant Secretary and Director of None Over
Trustee since 1998 Centennial Asset Management Corporation $100,000
Age: 70 (December 1991-April 1999); President,
Treasurer and Director of Centennial
Capital Corporation (June 1989-April
1999); Chief Executive Officer and
Director of MultiSource Services, Inc.
(March 1996-April 1999); Mr. Bowen held
several positions with the Manager and
with subsidiary or affiliated companies of
the Manager (September 1987-April 1999).
Oversees 37 portfolios in the
OppenheimerFunds complex.
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---------------------------------------------------------------------------------------
Edward L. Cameron, Member of The Life Guard of Mount Vernon None Over
Trustee since 1999 (George Washington historical site) (since $100,000
Age: 68 June 2000); Director of Genetic ID, Inc.
(biotech company) (March 2001-May 2002);
Partner at PricewaterhouseCoopers LLP
(accounting firm) (July 1974-June 1999);
Chairman of Price Waterhouse LLP Global
Investment Management Industry Services
Group (accounting firm) (July 1994-June
1998). Oversees 37 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Jon S. Fossel, Director of UNUMProvident (insurance None Over
Trustee since 1990 company) (since June 2002); Director of $100,000
Age: 64 Northwestern Energy Corp. (public utility
corporation) (since November 2004);
Director of P.R. Pharmaceuticals (October
1999-October 2003); Director of Rocky
Mountain Elk Foundation (non-profit
organization) (February 1998-February 2003
and since February 2005); Chairman and
Director (until October 1996) and
President and Chief Executive Officer
(until October 1995) of the Manager;
President, Chief Executive Officer and
Director of the following: Oppenheimer
Acquisition Corp. ("OAC") (parent holding
company of the Manager), Shareholders
Services, Inc. and Shareholder Financial
Services, Inc. (until October 1995).
Oversees 37 portfolios in the
OppenheimerFunds complex.
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---------------------------------------------------------------------------------------
Sam Freedman, Director of Colorado Uplift (charitable None Over
Trustee since 1996 organization) (since September 1984). Mr. $100,000
Age: 66 Freedman held several positions with the
Manager and with subsidiary or affiliated
companies of the Manager (until October
1994). Oversees 37 portfolios in the
OppenheimerFunds complex.
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---------------------------------------------------------------------------------------
Beverly L. Trustee of Monterey Institute for None Over
Hamilton, International Studies (educational $100,000
Trustee since 2002 organization) (since February 2000); Board
Age: 60 Member of Middlebury College (educational
organization) (since December 2005);
Director of The California Endowment
(philanthropic organization) (since April
2002); Director (February 2002-2005) and
Chairman of Trustees (since 2006) of the
Community Hospital of Monterey Peninsula;
Director (October 1991-2005) and Vice
Chairman (since 2006) of American Funds'
Emerging Markets Growth Fund, Inc. (mutual
fund); President of ARCO Investment
Management Company (February 1991-April
2000); Member of the investment committees
of The Rockefeller Foundation (since 2001)
and The University of Michigan (since
2000); Advisor at Credit Suisse First
Boston's Sprout venture capital unit
(venture capital fund) (1994-January
2005); Trustee of MassMutual Institutional
Funds (investment company) (1996-June
2004); Trustee of MML Series Investment
Fund (investment company) (April 1989-June
2004); Member of the investment committee
of Hartford Hospital (2000-2003); and
Advisor to Unilever (Holland) pension fund
(2000-2003). Oversees 37 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Robert J. Malone, Director of Jones International University None Over
Trustee since 2002 (educational organization) (since August $100,000
Age: 62 2005); Chairman, Chief Executive Officer
and Director of Steele Street State Bank
(commercial banking) (since August 2003);
Director of Colorado UpLIFT (charitable
organization) (since 1986); Trustee of the
Gallagher Family Foundation (non-profit
organization) (since 2000); Former
Chairman of U.S. Bank-Colorado (subsidiary
of U.S. Bancorp and formerly Colorado
National Bank) (July 1996-April 1999);
Director of Commercial Assets, Inc. (real
estate investment trust) (1993-2000);
Director of Jones Knowledge, Inc.
(2001-July 2004); and Director of U.S.
Exploration, Inc. (oil and gas
exploration) (1997-February 2004).
Oversees 37 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
F. William Trustee of MassMutual Select Funds None Over
Marshall, Jr., (formerly MassMutual Institutional Funds) $100,000
Trustee since 2000 (investment company) (since 1996) and MML
Age: 64 Series Investment Fund (investment
company) (since 1996); Trustee (since
1987) and Chairman (1994-2005) of the
Investment Committee of the Worcester
Polytech Institute (private university);
President and Treasurer of the SIS Funds
(private charitable fund) (since January
1999); Chairman of SIS & Family Bank,
F.S.B. (formerly SIS Bank) (commercial
bank) (January 1999-July 1999); and
Executive Vice President of Peoples
Heritage Financial Group, Inc. (commercial
bank) (January 1999-July 1999). Oversees
39 portfolios in the OppenheimerFunds
complex.*
---------------------------------------------------------------------------------------
* Includes two open-end investment companies: MassMutual Select Funds and
MML Series Investment Fund. In accordance with the instructions for Form
N-1A, for purposes of this section only, MassMutual Select Funds and MML
Series Investment Fund are included in the "Fund Complex." The Manager
does not consider MassMutual Select Funds and MML Series Investment Fund
to be part of the OppenheimerFunds' "Fund Complex" as that term may be
otherwise interpreted.

The address of Mr. Murphy is Two World Financial Center, 225 Liberty Street,
11th Floor, New York, New York 10281-1008. Mr. Murphy serves as a Trustee and
as an officer for an indefinite term, or until his resignation, retirement,
death or removal. Mr. Murphy is an "Interested Trustee" because he is
affiliated with the Manager by virtue of his positions as an officer and
director of the Manager, and as a shareholder of its parent company. Mr.
Murphy was elected as a Trustee of the Fund with the understanding that in
the event he ceases to be the chief executive officer of the Manager, he will
resign as a Trustee of the Fund and the other Board II Funds (defined below)
for which he is a director or trustee.

-----------------------------------------------------------------------------------
Interested Trustee and Officer
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Name, Principal Occupation(s) During the Past 5 Dollar Aggregate
Dollar
Range Of
y Shares
Range of Beneficially
Position(s) Shares Owned in
Held with the Years; Other Trusteeships/Directorships Beneficiall All
Fund, Length Held; Number of Portfolios in the Fund Owned in Supervised
of Service, Age Complex Currently Overseen the Fund Funds
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
As of December 31,
2005
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
John V. Murphy, Chairman, Chief Executive Officer and None Over
President, Director (since June 2001) and President $100,000
Principal (since September 2000) of the Manager;
Executive President and director or trustee of other
Officer and Oppenheimer funds; President and Director
Trustee since of OAC and of Oppenheimer Partnership
2001 Holdings, Inc. (holding company subsidiary
Age: 57 of the Manager) (since July 2001);
Director of OppenheimerFunds Distributor,
Inc. (subsidiary of the Manager) (since
November 2001); Chairman and Director of
Shareholder Services, Inc. and of
Shareholder Financial Services, Inc.
(transfer agent subsidiaries of the
Manager) (since July 2001); President and
Director of OppenheimerFunds Legacy
Program (charitable trust program
established by the Manager) (since July
2001); Director of the following
investment advisory subsidiaries of the
Manager: OFI Institutional Asset
Management, Inc., Centennial Asset
Management Corporation, Trinity Investment
Management Corporation and Tremont Capital
Management, Inc. (since November 2001),
HarbourView Asset Management Corporation
and OFI Private Investments, Inc. (since
July 2001); President (since November
2001) and Director (since July 2001) of
Oppenheimer Real Asset Management, Inc.;
Executive Vice President of Massachusetts
Mutual Life Insurance Company (OAC's
parent company) (since February 1997);
Director of DLB Acquisition Corporation
(holding company parent of Babson Capital
Management LLC) (since June 1995); Member
of the Investment Company Institute's
Board of Governors (since October 3,
2003); Chief Operating Officer of the
Manager (September 2000-June 2001);
President and Trustee of MML Series
Investment Fund and MassMutual Select
Funds (open-end investment companies)
(November 1999-November 2001); Director of
C.M. Life Insurance Company (September
1999-August 2000); President, Chief
Executive Officer and Director of MML Bay
State Life Insurance Company (September
1999-August 2000); Director of Emerald
Isle Bancorp and Hibernia Savings Bank
(wholly-owned subsidiary of Emerald Isle
Bancorp) (June 1989-June 1998). Oversees
92 portfolios in the OppenheimerFunds
complex.
-----------------------------------------------------------------------------------

The addresses of the officers in the chart below are as follows: for Messrs.
Gillespie, Manioudakis, Schadt and Zack and Ms. Bloomberg, Two World
Financial Center, 225 Liberty Street, New York, New York 10281-1008, for
Messrs. Petersen, Szilagyi, Vandehey and Wixted and Ms. Ives, 6803 S. Tucson
Way, Centennial, Colorado 80112-3924. Each officer serves for an indefinite
term or until his or her resignation, retirement death or removal.

-------------------------------------------------------------------------------------
Other Officers of the Fund
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name, Position(s) Principal Occupation(s) During Past 5 Years
Held with the
Fund, Length of
Service, Age
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Angelo Senior Vice President of the Manager (since April 2002), of
Manioudakis, HarbourView Asset Management Corporation (since April, 2002 and
Vice President of OFI Institutional Asset Management, Inc. (since June 2002);
and Portfolio Executive Director and portfolio manager for Miller, Anderson &
Manager since 2003 Sherrerd, a division of Morgan Stanley Investment Management
Age: 40 (August 1993-April 2002). An officer of 13 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Rudi W. Schadt, Vice President, Director of Research in Product Design and Risk
Vice President Management of the Manager. Prior to joining the Manager in
and Portfolio February 2002 he was a Director and Senior Quantitative Analyst
Manager since 2004 (2000-2001) at UBS Asset Management prior to which he was an
Age: 48 Associate Director of Research (since June 1999) and Senior
Researcher and Portfolio Manager (from June 1997) at State
Street Global Advisors. An officer of 7 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Mark S. Vandehey, Senior Vice President and Chief Compliance Officer of the
Vice President Manager (since March 2004); Vice President of OppenheimerFunds
and Chief Distributor, Inc., Centennial Asset Management Corporation and
Compliance Shareholder Services, Inc. (since June 1983); Vice President and
Officer since 2004 Director of Internal Audit of the Manager (1997-February 2004).
Age: 56 An officer of 92 portfolios in the OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer of the Manager (since March
Treasurer and 1999); Treasurer of the following: HarbourView Asset Management
Principal Corporation, Shareholder Financial Services, Inc., Shareholder
Financial & Services, Inc., Oppenheimer Real Asset Management Corporation,
Accounting and Oppenheimer Partnership Holdings, Inc. (since March 1999),
Officer since 1999 OFI Private Investments, Inc. (since March 2000),
Age: 47 OppenheimerFunds International Ltd. and OppenheimerFunds plc
(since May 2000), OFI Institutional Asset Management, Inc.
(since November 2000), and OppenheimerFunds Legacy Program
(since June 2003); Treasurer and Chief Financial Officer of OFI
Trust Company (trust company subsidiary of the Manager) (since
May 2000); Assistant Treasurer of the following: OAC (since
March 1999), Centennial Asset Management Corporation (March
1999-October 2003) and OppenheimerFunds Legacy Program (April
2000-June 2003); Principal and Chief Operating Officer of
Bankers Trust Company-Mutual Fund Services Division (March
1995-March 1999). An officer of 92 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Brian Petersen, Assistant Vice President of the Manager (since August 2002);
Assistant Manager/Financial Product Accounting of the Manager (November
Treasurer since 1998-July 2002). An officer of 92 portfolios in the
2004 OppenheimerFunds complex.
Age:36
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Brian C. Szilagyi, Assistant Vice President of the Manager (since July 2004);
Assistant Director of Financial Reporting and Compliance of First Data
Treasurer since Corporation (April 2003-July 2004); Manager of Compliance of
2005 Berger Financial Group LLC (May 2001-March 2003). An officer of
Age: 36 92 portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Robert G. Zack, Executive Vice President (since January 2004) and General
Vice President Counsel (since March 2002) of the Manager; General Counsel and
and Secretary Director of the Distributor (since December 2001); General
since 2001 Counsel of Centennial Asset Management Corporation (since
Age: 58 December 2001); Senior Vice President and General Counsel of
HarbourView Asset Management Corporation (since December 2001);
Secretary and General Counsel of OAC (since November 2001);
Assistant Secretary (since September 1997) and Director (since
November 2001) of OppenheimerFunds International Ltd. and
OppenheimerFunds plc; Vice President and Director of Oppenheimer
Partnership Holdings, Inc. (since December 2002); Director of
Oppenheimer Real Asset Management, Inc. (since November 2001);
Senior Vice President, General Counsel and Director of
Shareholder Financial Services, Inc. and Shareholder Services,
Inc. (since December 2001); Senior Vice President, General
Counsel and Director of OFI Private Investments, Inc. and OFI
Trust Company (since November 2001); Vice President of
OppenheimerFunds Legacy Program (since June 2003); Senior Vice
President and General Counsel of OFI Institutional Asset
Management, Inc. (since November 2001); Director of
OppenheimerFunds (Asia) Limited (since December 2003); Senior
Vice President (May 1985-December 2003), Acting General Counsel
(November 2001-February 2002) and Associate General Counsel (May
1981-October 2001) of the Manager; Assistant Secretary of the
following: Shareholder Services, Inc. (May 1985-November 2001),
Shareholder Financial Services, Inc. (November 1989-November
2001), and OppenheimerFunds International Ltd. (September
1997-November 2001). An officer of 92 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Lisa I. Bloomberg, Vice President and Associate Counsel of the Manager (since May
Assistant 2004); First Vice President (April 2001-April 2004), Associate
Secretary since General Counsel (December 2000-April 2004), Corporate Vice
2004 President (May 1999-April 2001) and Assistant General Counsel
Age: 38 (May 1999-December 2000) of UBS Financial Services Inc.
(formerly, PaineWebber Incorporated). An officer of 92
portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Kathleen T. Ives, Vice President (since June 1998) and Senior Counsel and
Assistant Assistant Secretary (since October 2003) of the Manager; Vice
Secretary since President (since 1999) and Assistant Secretary (since October
2001 2003) of the Distributor; Assistant Secretary of Centennial
Age: 41 Asset Management Corporation (since October 2003); Vice
President and Assistant Secretary of Shareholder Services, Inc.
(since 1999); Assistant Secretary of OppenheimerFunds Legacy
Program and Shareholder Financial Services, Inc. (since December
2001); Assistant Counsel of the Manager (August 1994-October
2003). An officer of 92 portfolios in the OppenheimerFunds
complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Phillip S. Senior Vice President and Deputy General Counsel of the Manager
Gillespie, (since September 2004); First Vice President (2000-September
Assistant 2004), Director (2000-September 2004) and Vice President
Secretary since (1998-2000) of Merrill Lynch Investment Management. An officer
2004 of 92 portfolios in the OppenheimerFunds complex.
Age: 42

-------------------------------------------------------------------------------------

Remuneration of the Officers and Trustees. The officers and the
interested Trustee of the Fund who are affiliated with the Manager receive no
salary or fee from the Fund. The Independent Trustees received the
compensation shown below from the Fund for serving as a Trustee and member of
a committee (if applicable), with respect to the Fund's fiscal year ended
August 31, 2006. The total compensation, including accrued retirement
benefits, from the Fund and fund complex represents compensation received for
serving as a Trustee and member of a committee (if applicable) of the Boards
of the Fund and other funds in the OppenheimerFunds complex during the
calendar year ended December 31, 2005.

---------------------------------------------------------------------------------
Name of Trustee and Other Fund Aggregate Compensation Total Compensation
From the Fund and
Position(s) (as applicable) From the Fund(1) Fund Complex(2)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
William L. Armstrong $1,403 $178,000
Chairman of the Board and
Governance Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert G. Avis $935 $118,500
Review Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
George C. Bowen $935 $118,500
Audit Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Edward L. Cameron $1,107 $136,000
Audit Committee Chairman
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jon S. Fossel $989 $124,100
Review Committee Chairman
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Sam Freedman $935 $118,500
Review Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Beverly Hamilton $860(3) $107,175
Review Committee Member and
Governance Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert J. Malone $1,074(4) $134,868
Governance Committee Chairman
and
Audit Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
F. William Marshall, Jr.
Audit Committee Member and $935 $169,500(5)
Governance Committee Member
---------------------------------------------------------------------------------
1. "Aggregate Compensation From the Fund" includes fees and deferred
compensation, if any.
2. In accordance with SEC regulations, for purposes of this section only,
"Fund Complex" includes the Oppenheimer funds, the MassMutual
Institutional Funds, the MassMutual Select Funds and the MML Series
Investment Fund, the investment adviser for which is the indirect parent
company of the Fund's Manager. The Manager also serves as the Sub-Advisor
to the following: MassMutual Premier International Equity Fund, MassMutual
Premier Main Street Fund, MassMutual Premier Strategic Income Fund,
MassMutual Premier Capital Appreciation Fund, and MassMutual Premier
Global Fund. The Manager does not consider MassMutual Institutional Funds,
MassMutual Select Funds and MML Series Investment Fund to be part of the
OppenheimerFunds' "Fund Complex" as that term may be otherwise interpreted.
3. Includes $860 deferred by Ms. Hamilton under the "Compensation Deferral
Plan" described below.
4. Includes $329 deferred by Mr. Malone under the "Compensation Deferral
Plan" described below.
5. Includes $51,000 compensation paid to Mr. Marshall for serving as a
Trustee for MassMutual Select Funds and MML Series Investment Fund.

|X| Compensation Deferral Plan For Trustees. The Board of Trustees has
adopted a Compensation Deferral Plan for Independent Trustees that enables
them to elect to defer receipt of all or a portion of the annual fees they
are entitled to receive from the Fund. Under the plan, the compensation
deferred by a Trustee is periodically adjusted as though an equivalent amount
had been invested in shares of one or more Oppenheimer funds selected by the
Trustee. The amount paid to the Trustee under the plan will be determined
based upon the amount of compensation deferred and the performance of the
selected funds.

Deferral of Trustees' fees under the plan will not materially affect
the Fund's assets, liabilities or net income per share. The plan will not
obligate the Fund to retain the services of any Trustee or to pay any
particular level of compensation to any Trustee. Pursuant to an Order
issued by the Securities and Exchange Commission ("SEC"), the Fund may invest
in the funds selected by the Trustees under the plan without shareholder
approval for the limited purpose of determining the value of the Trustees'
deferred compensation account.

|X| Major Shareholders. As of November 3, 2006, the only persons or
entities who owned of record or were known by the Fund to own beneficially 5%
or more of any class of the Fund's outstanding shares were:

MLPF&S for the Sole Benefit of its Customers, Attn: Fund Administration, 4800
Deer Lake Drive E., Floor 3, Jacksonville, FL 32246-6484, which owned
136,543.934 Class B shares (representing approximately 5.66% of the Class B
shares then outstanding).

MLPF&S for the Sole Benefit of its Customers, Attn: Fund Administration, 4800
Deer Lake Drive E., Floor 3, Jacksonville, FL 32246-6484, which owned
217,836.681 Class C shares (representing approximately 22.68% of the Class C
shares then outstanding).

The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a
holding company controlled by Massachusetts Mutual Life Insurance Company, a
global, diversified insurance and financial services organization.

|X| Code of Ethics. The Fund, the Manager and the Distributor have a
Code of Ethics. It is designed to detect and prevent improper personal
trading by certain employees, including portfolio managers, that would
compete with or take advantage of the Fund's portfolio transactions. Covered
persons include persons with knowledge of the investments and investment
intentions of the Fund and other funds advised by the Manager. The Code of
Ethics does permit personnel subject to the Code to invest in securities,
including securities that may be purchased or held by the Fund, subject to a
number of restrictions and controls. Compliance with the Code of Ethics is
carefully monitored and enforced by the Manager.

The Code of Ethics is an exhibit to the Fund's registration statement
filed with the SEC and can be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. You can obtain information about the hours
of operation of the Public Reference Room by calling the SEC at
1.202.942.8090. The Code of Ethics can also be viewed as part of the Fund's
registration statement on the SEC's EDGAR database at the SEC's Internet
website at www.sec.gov. Copies may be obtained, after paying a duplicating
fee, by electronic request at the following E-mail address:
publicinfo@sec.gov, or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.

|X| Portfolio Proxy Voting. The Fund has adopted Portfolio Proxy Voting
Policies and Procedures under which the Fund votes proxies relating to
securities ("portfolio proxies") held by the Fund. The Fund's primary
consideration in voting portfolio proxies is the financial interests of the
Fund and its shareholders. The Fund has retained an unaffiliated third-party
as its agent to vote portfolio proxies in accordance with the Fund's
Portfolio Proxy Voting Guidelines and to maintain records of such portfolio
proxy voting. The Proxy Voting Guidelines include provisions to address
conflicts of interest that may arise between the Fund and the Manager where a
directly-controlled affiliate of the Manager manages or administers the
assets of a pension plan of a company soliciting the proxy. The Fund's
Portfolio Proxy Voting Guidelines on routine and non-routine proxy proposals
are summarized below.

o The Fund votes with the recommendation of the issuer's management on
routine matters, including election of directors nominated by
management and ratification of the independent registered public
accounting firm, unless circumstances indicate otherwise.
o In general, the Fund opposes "anti-takeover" proposals and supports the
elimination of anti-takeover proposals, absent unusual
circumstances.
o The Fund supports shareholder proposals to reduce a super-majority vote
requirement, and opposes management proposals to add a
super-majority vote requirement.
o The Fund opposes proposals to classify the board of directors.
o The Fund supports proposals to eliminate cumulative voting.
o The Fund opposes re-pricing of stock options.
o The Fund generally considers executive compensation questions such as
stock option plans and bonus plans to be ordinary business activity.
The Fund analyzes stock option plans, paying particular attention to
their dilutive effect. While the Fund generally supports management
proposals, the Fund opposes plans it considers to be excessive.

The Fund is required to file Form N-PX, with its complete proxy voting
record for the 12 months ended June 30th, no later than August 31st of each
year. The Fund's Form N-PX filing is available (i) without charge, upon
request, by calling the Fund toll-free at 1.800.525.7048 and (ii) on the
SEC's website at www.sec.gov.

|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Fund under an investment advisory
agreement between the Manager and the Fund. The Manager selects securities
for the Fund's portfolio and handles its day-to-day business. The portfolio
managers of the Fund are employed by the Manager and are the persons who are
principally responsible for the day-to-day management of the Fund's
portfolio.

The agreement requires the Manager, at its expense, to provide the Fund
with adequate office space, facilities and equipment. It also requires the
Manager to provide and supervise the activities of all administrative and
clerical personnel required to provide effective administration for the Fund.
Those responsibilities include the compilation and maintenance of records
with respect to its operations, the preparation and filing of specified
reports, and composition of proxy materials and registration statements for
continuous public sale of shares of the Fund.

The Fund pays expenses not expressly assumed by the Manager under the
advisory agreement. The advisory agreement lists examples of expenses paid by
the Fund. The major categories relate to interest, taxes, brokerage
commissions, fees to certain Trustees, legal and audit expenses, custodian
and transfer agent expenses, share issuance costs, certain printing and
registration costs and non-recurring expenses, including litigation costs.
The management fees paid by the Fund to the Manager are calculated at the
rates described in the Prospectus, which are applied to the assets of the
Fund as a whole. The fees are allocated to each class of shares based upon
the relative proportion of the Fund's net assets represented by that class.
The management fees paid by the Fund to the Manager during its last three
fiscal years were:

-----------------------------------------------------------------
Fiscal Year Ended August 31: Management Fee Paid to
OppenheimerFunds, Inc.
-----------------------------------------------------------------
-----------------------------------------------------------------
2004(1) $874,917
-----------------------------------------------------------------
-----------------------------------------------------------------
2005 $1,261,400
-----------------------------------------------------------------
-----------------------------------------------------------------
2006 $988,803
-----------------------------------------------------------------
1. For the fiscal period from November 10, 2003 (commencement of
operations) to August 31, 2004.

The investment advisory agreement states that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under the investment
advisory agreement, the Manager is not liable for any loss the Fund sustains
for any investment, adoption of any investment policy, or the purchase, sale
or retention of any security.

The agreement permits the Manager to act as investment advisor for any
other person, firm or corporation and to use the names "Oppenheimer" and
"Main Street" in connection with other investment companies for which it may
act as investment advisor or general distributor. If the Manager shall no
longer act as investment advisor to the Fund, the Manager may withdraw the
right of the Fund's parent corporation to use the names "Oppenheimer" and
"Main Street" as part of its name and the name of the Fund.

Portfolio Manager. The Fund's portfolio is managed by Angelo Manioudakis
and Rudi W. Schadt (the "Portfolio Managers") who are responsible for the
day-to-day management of the Fund's investments.

Other Accounts Managed. In addition to managing the Fund's
investments, each Portfolio Manager also manage other investment portfolios
and accounts. The following table provides information regarding the other
portfolios and accounts managed by the Portfolio Managers as of August 31,
2006. No account has a performance-based advisory fee:

Portfolio RegistereTotal Other Total Other Total
Assets in
Assets in Other
Registered Pooled Pooled Assets
InvestmenInvestment InvestmentInvestment in Other 2)
CompaniesCompanies Vehicles Vehicles AccountsAccounts
Manager Managed Managed(1) Managed Managed(1) Managed Managed(1,
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Angelo 15 $9,295.9 6 $200 2 $160.8
Manioudakis
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Rudi W. Schadt 6 $2,317.3 None None None None
----------------------------------------------------------------------------

1. In millions.
2. Does not include personal accounts of portfolio managers and their
families, which are subject to the Code of Ethics.

As indicated above, the Portfolio Managers also manage other funds and
accounts. Potentially, at times, those responsibilities could conflict with
the interests of the Fund. That may occur whether the investment strategies
of the other funds or accounts are the same as, or different from, the Fund's
investment objectives and strategies. For example the Portfolio Managers may
need to allocate investment opportunities between the Fund and another fund
or account having similar objectives or strategies, or they may need to
execute transactions for another fund or account that could have a negative
impact on the value of securities held by the Fund. Not all funds and
accounts advised by the Manager have the same management fee. If the
management fee structure of another fund or account is more advantageous to
the Manager than the fee structure of the Fund, the Manager could have an
incentive to favor the other fund or account. However, the Manager's
compliance procedures and Code of Ethics recognize the Manager's fiduciary
obligations to treat all of its clients, including the Fund, fairly and
equitably, and are designed to preclude the Portfolio Managers from favoring
one client over another. It is possible, of course, that those compliance
procedures and the Code of Ethics may not always be adequate to do so. At
various times, the Fund's Portfolio Managers may manage other funds or
accounts with investment objectives and strategies that are similar to those
of the Fund, or may manage funds or accounts with investment objectives and
strategies that are different from those of the Fund.

Compensation of the Portfolio Managers. The Fund's Portfolio Managers
are employed and compensated by the Manager, not the Fund. Under the
Manager's compensation program for its portfolio managers and portfolio
analysts, their compensation is based primarily on the investment performance
results of the funds and accounts they manage, rather than on the financial
success of the Manager. This is intended to align the portfolio managers and
analysts' interests with the success of the funds and accounts and their
shareholders. The Manager's compensation structure is designed to attract and
retain highly qualified investment management professionals and to reward
individual and team contributions toward creating shareholder value. As of
August 31, 2006, each Portfolio Managers' compensation consisted of three
elements: a base salary, an annual discretionary bonus and eligibility to
participate in long-term awards of options and appreciation rights in regard
to the common stock of the Manager's holding company parent. Senior portfolio
managers may also be eligible to participate in the Manager's deferred
compensation plan.

To help the Manager attract and retain talent, the base pay component of
each portfolio manager is reviewed regularly to ensure that it reflects the
performance of the individual, is commensurate with the requirements of the
particular portfolio, reflects any specific competence or specialty of the
individual manager, and is competitive with other comparable positions. The
annual discretionary bonus is determined by senior management of the Manager
and is based on a number of factors, including a fund's pre-tax performance
for periods of up to five years, measured against an appropriate Lipper
benchmark selected by management. Other factors considered include management
quality (such as style consistency, risk management, sector coverage, team
leadership and coaching) and organizational development. The Portfolio
Managers' compensation is not based on the total value of the Fund's
portfolio assets, although the Fund's investment performance may increase
those assets. The compensation structure is also intended to be internally
equitable and serve to reduce potential conflicts of interest between the
Fund and other funds and accounts managed by the Portfolio Managers. The
compensation structure of the other funds and accounts managed by the
Portfolio Managers is the same as the compensation structure of the Fund,
described above.

Ownership of Fund Shares. As of August 31, 2006, the Portfolio Managers
did not beneficially own any shares of the Funds.

Brokerage Policies of the Fund

Brokerage Provisions of the Investment Advisory Agreement. One of the duties
of the Manager under the investment advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers to effect the Fund's
portfolio transactions. The Manager is authorized by the advisory agreement
to employ broker-dealers, including "affiliated" brokers, as that term is
defined in the Investment Company Act. The Manager will employ broker-dealers
that the Manager thinks, in its best judgment based on all relevant factors,
will implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" of the Fund's portfolio transactions. "Best execution" means
prompt and reliable execution at the most favorable price obtainable. The
Manager need not seek competitive commission bidding. However, it is expected
to be aware of the current rates of eligible brokers and to minimize the
commissions paid to the extent consistent with the interests and policies of
the Fund as established by its Board of Trustees.

Under the investment advisory agreement, in choosing brokers to execute
portfolio transactions for the Fund, the Manager may select brokers (other
than affiliates) that provide brokerage and/or research services to the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to those brokers may be higher
than another qualified broker would charge, if the Manager makes a good faith
determination that the commission is fair and reasonable in relation to the
services provided.

Rule 12b-1 under the Investment Company Act prohibits any fund from
compensating a broker or dealer for promoting or selling the fund's shares by
(1) directing to that broker or dealer any of the fund's portfolio
transactions, or (2) directing any other remuneration to that broker or
dealer, such as commissions, mark-ups, mark downs or other fees from the
fund's portfolio transactions, that were effected by another broker or dealer
(these latter arrangements are considered to be a type of "step-out"
transaction). In other words, a fund and its investment adviser cannot use
the fund's brokerage for the purpose of rewarding broker-dealers for selling
the fund's shares.

However, the Rule permits funds to effect brokerage transactions through
firms that also sell fund shares, provided that certain procedures are
adopted to prevent a quid pro quo with respect to portfolio brokerage
allocations. As permitted by the Rule, the Manager has adopted procedures
(and the Fund's Board of Trustees has approved those procedures) that permit
the Fund to direct portfolio securities transactions to brokers or dealers
that also promote or sell shares of the Fund, subject to the "best execution"
considerations discussed above. Those procedures are designed to prevent: (1)
the Manager's personnel who effect the Fund's portfolio transactions from
taking into account a broker's or dealer's promotion or sales of the Fund
shares when allocating the Fund's portfolio transactions, and (2) the Fund,
the Manager and the Distributor from entering into agreements or
understandings under which the Manager directs or is expected to direct the
Fund's brokerage directly, or through a "step-out" arrangement, to any broker
or dealer in consideration of that broker's or dealer's promotion or sale of
the Fund's shares or the shares of any of the other Oppenheimer funds.

Brokerage Practices Followed by the Manager. The Manager allocates brokerage
for the Fund subject to the provisions of the investment advisory agreement
and the procedures and rules described above. Generally, the Manager's
portfolio traders allocate brokerage based upon recommendations from the
Manager's portfolio managers. In certain instances, portfolio managers may
directly place trades and allocate brokerage. In either case, the Manager's
executive officers supervise the allocation of brokerage.

Transactions in securities other than those for which an exchange is
the primary market are generally done with principals or market makers.
Brokerage commissions are paid primarily for transactions in listed
securities or for certain fixed-income agency transactions in the secondary
market. Otherwise, brokerage commissions are paid only if it appears likely
that a better price or execution can be obtained by doing so.

Other funds advised by the Manager have investment policies similar to
those of the Fund. Those other funds may purchase or sell the same securities
as the Fund at the same time as the Fund, which could affect the supply and
price of the securities. If two or more funds advised by the Manager purchase
the same security on the same day from the same dealer, the transactions
under those combined orders are averaged as to price and allocated in
accordance with the purchase or sale orders actually placed for each account.

Most purchases of debt obligations are principal transactions at net
prices. Instead of using a broker for those transactions, the Fund normally
deals directly with the selling or purchasing principal or market maker
unless the Manager determines that a better price or execution can be
obtained by using the services of a broker. Purchases of portfolio securities
from underwriters include a commission or concession paid by the issuer to
the underwriter. Purchases from dealers include a spread between the bid and
asked prices. The Fund seeks to obtain prompt execution of these orders at
the most favorable net price.

The investment advisory agreement permits the Manager to allocate
brokerage for research services. The research services provided by a
particular broker may be useful only to one or more of the advisory accounts
of the Manager and its affiliates. The investment research received for the
commissions of those other accounts may be useful both to the Fund and one or
more of the Manager's other accounts. Investment research may be supplied to
the Manager by a third party at the instance of a broker through which trades
are placed.

Investment research services include information and analysis on
particular companies and industries as well as market or economic trends and
portfolio strategy, market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If a research
service also assists the Manager in a non-research capacity (such as
bookkeeping or other administrative functions), then only the percentage or
component that provides assistance to the Manager in the investment
decision-making process may be paid in commission dollars.

The Board of Trustees permits the Manager to use stated commissions on
secondary fixed-income agency trades to obtain research if the broker
represents to the Manager that: (i) the trade is not from or for the broker's
own inventory, (ii) the trade was executed by the broker on an agency basis
at the stated commission, and (iii) the trade is not a riskless principal
transaction. The Board of Trustees permits the Manager to use commissions on
fixed-price offerings to obtain research, in the same manner as is permitted
for agency transactions.

The research services provided by brokers broadens the scope and
supplements the research activities of the Manager. That research provides
additional views and comparisons for consideration, and helps the Manager to
obtain market information for the valuation of securities that are either
held in the Fund's portfolio or are being considered for purchase. The
Manager provides information to the Board about the commissions paid to
brokers furnishing such services, together with the Manager's representation
that the amount of such commissions was reasonably related to the value or
benefit of such services.

---------------------------------------------------------------------
Fiscal Year Ended Total Brokerage Commissions Paid by the
August 31: Fund(1)
---------------------------------------------------------------------
---------------------------------------------------------------------
2004 None
---------------------------------------------------------------------
---------------------------------------------------------------------
2005 None
---------------------------------------------------------------------
---------------------------------------------------------------------
2006 None(2)
---------------------------------------------------------------------
1. Amounts do not include spreads or commissions on principal transactions
on a net trade basis.
2. In the fiscal year ended August 31, 2006, the amount of transactions
directed to brokers for research services was $0 and amount of
the commissions paid to broker-dealers for those services was
$0.

Distribution and Service Plans

The Distributor. Under its General Distributor's Agreement with the Fund, the
Distributor acted as the Fund's principal underwriter in the public offering
of the Fund's classes of shares. The Distributor bore the expenses normally
attributable to sales, including advertising and the cost of printing and
mailing prospectuses, other than those furnished to existing shareholders.
The Distributor was not obligated to sell a specific number of shares.

The sales charges and concessions paid to, or retained by, the
Distributor from the sale of shares and the contingent deferred sales charges
retained by the Distributor on the redemption of shares during the Fund's
three most recent fiscal years are shown in the tables below.

---------------------------------------------
Fiscal Aggregate Class A
Front-End Sales
Year Front-End Sales Charges
Ended Charges on Class Retained by
8/31: A Shares Distributor(1)
---------------------------------------------
---------------------------------------------
2004(2) $2,398,320 $5,385
---------------------------------------------
---------------------------------------------
2005 $1,974 $3,869
---------------------------------------------
---------------------------------------------
2006 $1,974 None
---------------------------------------------
1. Includes amounts retained by a broker-dealer that is an affiliate or a
parent of the Distributor.
2. For the fiscal period from November 10, 2003 (commencement of
operations) to August 31, 2004.

-------------------------------------------------------------------
Fiscal Concessions on Concessions on Concessions on
Year Class A Shares Class B Shares Class C Shares
Ended Advanced by Advanced by Advanced by
8/31: Distributor(1) Distributor(1) Distributor(1)
-------------------------------------------------------------------
-------------------------------------------------------------------
2004(2) $64,370 $5,758,636 $924,158
-------------------------------------------------------------------
-------------------------------------------------------------------
2005 $277 $16,967 $113
-------------------------------------------------------------------
-------------------------------------------------------------------
2006 $3,100 None None
-------------------------------------------------------------------
1. The Distributor advanced concession payments to financial
intermediaries for certain sales of Class A shares and for sales of
Class B and Class C shares from its own resources at the time of sale.
2. For the fiscal period from November 10, 2003 (commencement of
operations) to August 31, 2004.

---------------------------------------------------------------
Fiscal Class A Class B Class C
Contingent Contingent Contingent
Period Deferred Sales Deferred Sales Deferred Sales
Ended Charges Charges Charges
8/31: Retained by Retained by Retained by
Distributor Distributor Distributor
---------------------------------------------------------------
---------------------------------------------------------------
2004(1) $9,008 $144,493 $15,641
---------------------------------------------------------------
---------------------------------------------------------------
2005 $29,104 $317,667 $22,412
---------------------------------------------------------------
---------------------------------------------------------------
2006 $22,684 $335,581 None
---------------------------------------------------------------
1. For the fiscal period from November 10, 2003 (commencement of
operations) to August 31, 2004.

Distribution and Service Plans. The Fund has adopted a Service Plan for Class
A shares and Distribution and Service Plans for Class B and Class C shares
under Rule 12b-1 of the Investment Company Act. Under those plans the Fund
pays the Distributor for all or a portion of its costs incurred in connection
with the distribution and/or servicing of the shares of the particular class.
Each plan has been approved by a vote of the Board of Trustees, including a
majority of the Independent Trustees(1), cast in person at a meeting called
for the purpose of voting on that plan.

Under the Plans, the Manager and the Distributor may make payments to
affiliates. In their sole discretion, they may also from time to time make
substantial payments from their own resources, which include the profits the
Manager derives from the advisory fees it receives from the Fund, to
compensate brokers, dealers, financial institutions and other intermediaries
for providing distribution assistance and/or administrative services or that
otherwise promote sales of the Fund's shares. These payments, some of which
may be referred to as "revenue sharing," may relate to the Fund's inclusion
on a financial intermediary's preferred list of funds offered to its clients.

Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Fund's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose
of voting on continuing the plan. A plan may be terminated at any time by the
vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the Investment Company Act) of the outstanding
shares of that class.

The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the amount
of payments to be made under a plan must be approved by shareholders of the
class affected by the amendment. Because Class B shares of the Fund
automatically convert into Class A shares 88 months after purchase, the Fund
must obtain the approval of both Class A and Class B shareholders for a
proposed material amendment to the Class A plan that would materially
increase payments under the plan. That approval must be by a majority of the
shares of each class, voting separately by class.

While the plans are in effect, the Treasurer of the Fund shall provide
separate written reports on the plans to the Board of Trustees at least
quarterly for its review. The reports shall detail the amount of all payments
made under a plan and the purpose for which the payments were made. Those
reports are subject to the review and approval of the Independent Trustees.

Each plan states that while it is in effect, the selection and
nomination of those Trustees of the Fund who are not "interested persons" of
the Fund is committed to the discretion of the Independent Trustees. This
does not prevent the involvement of others in the selection and nomination
process as long as the final decision as to selection or nomination is
approved by a majority of the Independent Trustees.

Under the plans for a class, no payment will be made to any recipient
in any period in which the aggregate net asset value of all Fund shares of
that class held by the recipient for itself and its customers does not exceed
a minimum amount, if any, that may be set from time to time by a majority of
the Independent Trustees.

|X| Class A Service Plan Fees. Under the Class A service plan, the
Distributor currently uses the fees it receives from the Fund to pay brokers,
dealers and other financial institutions (they are referred to as
"recipients") for personal services and account maintenance services they
provide for their customers who hold Class A shares. The services include,
among others, answering customer inquiries about the Fund, assisting in
establishing and maintaining accounts in the Fund, making the Fund's
investment plans available and providing other services at the request of the
Fund or the Distributor. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of
Class A shares. The Board has set the rate at that level. The Distributor
does not receive or retain the service fee on Class A shares in accounts for
which the Distributor has been listed as the broker-dealer of record. While
the plan permits the Board to authorize payments to the Distributor to
reimburse itself for services under the plan, the Board has not yet done so,
except in the case of the special arrangement described below, regarding
grandfathered retirement accounts. The Distributor makes payments to
recipients periodically at an annual rate not to exceed 0.25% of the average
annual net assets consisting of Class A shares held in the accounts of the
recipients or their customers.

During the first year after the shares were sold, the Distributor
retained the service fee to reimburse itself for the costs of distributing
the shares. After the first year shares were outstanding, the Distributor
made service fee payments to recipients periodically on those shares. The
advance payment was based on the net asset value of shares sold. Shares
purchased by exchange did not qualify for the advance service fee payment. If
Class A shares purchased by grandfathered retirement accounts were redeemed
during the first year after their purchase, the recipient of the service fees
on those shares would be obligated to repay the Distributor a pro rata
portion of the advance payment of the service fee made on those shares.

For the fiscal year ended August 31, 2006 payments under the Class A
plan totaled $181,212 of which nothing was retained by the Distributor under
the arrangement described above, and included $61,274 paid to an affiliate of
the Distributor's parent company. Any unreimbursed expenses the Distributor
incurs with respect to Class A shares in any fiscal year cannot be recovered
in subsequent years. The Distributor may not use payments received under the
Class A plan to pay any of its interest expenses, carrying charges, or other
financial costs, or allocation of overhead.

|X| ?Class B and Class C Service and Distribution Plan Fees. Under each
plan, service fees and distribution fees are computed on the average of the
net asset value of shares in the respective class, determined as of the close
of each regular business day during the period. The Class B and Class C plans
allow the Distributor to be compensated at a flat rate for its services and
costs in distributing Class B and Class C shares and servicing accounts,
whether the Distributor's distribution expenses are more or less than the
amounts paid by the Fund under the plan during the period for which the fee
is paid. The types of services that recipients provide are similar to the
services provided under the Class A service plan, described above.

Each plan permits the Distributor to retain both the asset-based sales
charges and the service fees or to pay recipients the service fee on a
periodic basis, without payment in advance. However, the Distributor
currently intends to pay the service fee to recipients in advance for the
first year after the shares were purchased. After the first year shares are
outstanding, the Distributor made service fee payments periodically on those
shares. The advance payment was based on the net asset value of shares sold.
Shares purchased by exchange did not qualify for the advance service fee
payment. If Class B or Class C shares were redeemed during the first year
after their purchase, the recipient of the service fees on those shares was
obligated to repay the Distributor a pro rata portion of the advance payment
of the service fee made on those shares.

The Distributor retains the asset-based sales charge on Class B shares.
The Distributor retained the asset-based sales charge on Class C shares
during the first year the shares were outstanding. It pays the asset-based
sales charge as an ongoing concession to the recipient on Class C shares
outstanding for a year or more. If a dealer has a special agreement with the
Distributor, the Distributor will pay the Class B and/or Class C service fee
and the asset-based sales charge to the dealer periodically in lieu of paying
the sales concessions and service fee in advance at the time of purchase.

If an investor no longer has another broker-dealer of record for an
existing account, the Distributor is automatically designated as the
broker-dealer of record, but solely for the purpose of acting as the
investor's agent to purchase the shares. In those cases, the Distributor
retains the asset-based sales charge on Class B and Class C shares, but does
not retain any service fees to the assets represented by that account. The
asset-based sales charges on Class B and Class C shares allowed investors to
buy shares without a front-end sales charge while allowing the Distributor to
compensate dealers that sold those shares. The Fund pays the asset-based
sales charges to the Distributor for its services rendered in distributing
Class B and Class C shares. The payments are made to the Distributor in
recognition that the Distributor:
o paid sales concessions to authorized brokers and dealers at the time of
sale and pays service fees as described above,
o may finance payment of sales concessions and/or the advance of the
service fee payment to recipients under the plans, or may provide
such financing from its own resources or from the resources of an
affiliate,
o employs personnel that provide distribution-related services to Class B
or Class C shares,
o bore the costs of sales literature, advertising and prospectuses (other
than those furnished to current shareholders) and state "blue sky"
registration fees and certain other distribution expenses,
o may not have been able to adequately compensate dealers that sold Class
B or Class C shares without receiving payment under the plans and
therefore may not have been able to offer such Classes for sale
absent the plans,
o receives payments under the plans consistent with the service fees and
asset-based sales charges paid by other non-proprietary funds that
charge 12b-1 fees, and
o may not be able to continue providing, at the same or at a lesser cost,
the same quality distribution-related services, or to obtain such
services from brokers and dealers, if the plan payments were to be
discontinued.

The Distributor's actual expenses in selling Class B or Class C shares
may have been more than the payments it received from the contingent deferred
sales charges collected on redeemed shares and from the Fund under the plans.
If either the Class B or Class C plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for distributing shares before the plan was
terminated.

-------------------------------------------------------------------------------
Distribution and Service Fees Paid to the Distributor for the Fiscal Year
Ended August 31, 2006
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Amount Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Payments Retained by Expenses of Net Assets
Under Plan Distributor Under Plan of Class
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class B Plan $849,160 $636,873(1) $3,078,451 4.04%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class C Plan $397,611 $23,810(2) $747,051 2.36%
-------------------------------------------------------------------------------
1. Includes $86,878 paid to an affiliate of the Distributor's parent
company.
2. Includes $16,009 paid to an affiliate of the Distributor's parent
company.

All payments under the Class B and Class C plans are subject to the
limitations imposed by the Conduct Rules of the National Association of
Securities Dealers, Inc. on payments of asset-based sales charges and service
fees.

Payments to Fund Intermediaries

Financial intermediaries may receive various forms of compensation or
reimbursement from the Fund in the form of 12b-1 plan payments as described
in the preceding section of this Statement of Additional Information. They
may also receive reallowance of commissions from the Distributor, derived
from sales charges paid by the clients of the financial intermediary, also as
described in this Statement of Additional Information. Additionally, the
Manager and/or the Distributor (including their affiliates) may make payments
to financial intermediaries in connection with their offering and selling
shares of the Fund and other Oppenheimer funds, providing marketing or
promotional support, transaction processing and/or administrative services.
Among the financial intermediaries that may receive these payments are
brokers and dealers who sell and/or hold shares of the Fund, banks (including
bank trust departments), registered investment advisers, insurance companies,
retirement plan and qualified tuition program administrators, third party
administrators, and other institutions that have selling, servicing or
similar arrangements with the Manager or Distributor. The payments to
intermediaries vary by the types of product sold, the features of the Fund
share class and the role played by the intermediary.

Possible types of payments to financial intermediaries include, without
limitation, those discussed below.

o Payments made by the Fund, or by an investor buying or selling shares
of the Fund may include:

o depending on the share class that the investor selects, contingent
deferred sales charges or initial front-end sales charges, all
or a portion of which front-end sales charges are payable by
the Distributor to financial intermediaries as sales
commissions (see "About Your Account" in the Prospectus);
o ongoing asset-based payments attributable to the share class selected,
including fees payable under the Fund's distribution and/or
service plans adopted under Rule 12b-1 under the Investment
Company Act, which are paid from the Fund's assets and
allocated to the class of shares to which the plan relates (see
"About the Fund -- Distribution and Service Plans" above);
o shareholder servicing payments for providing omnibus accounting,
recordkeeping, networking, sub-transfer agency or other
administrative or shareholder services, including retirement
plan and 529 plan administrative services fees, which are paid
from the assets of a Fund as reimbursement to the Manager or
Distributor for expenses they incur on behalf of the Fund.

o Payments made by the Manager or Distributor out of their respective
resources and assets, which may include profits the Manager derives
from investment advisory fees paid by the Fund. These payments are
made at the discretion of the Manager and/or the Distributor. These
payments, often referred to as "revenue sharing" payments, may be in
addition to the payments by the Fund listed above.

o These types of payments may reflect compensation for marketing support,
support provided in offering the Fund or other Oppenheimer
funds through certain trading platforms and programs,
transaction processing or other services;
o The Manager and Distributor each may also pay other compensation to the
extent the payment is not prohibited by law or by any
self-regulatory agency, such as the NASD. Payments are made
based on the guidelines established by the Manager and
Distributor, subject to applicable law.

These payments may provide an incentive to financial intermediaries to
actively market or promote the sale of shares of the Oppenheimer funds, or to
support the marketing or promotional efforts of the Distributor in having
offered shares of the Fund or offering other Oppenheimer funds. In addition,
some types of payments may provide a financial intermediary with an incentive
to recommend a particular share class. Financial intermediaries may earn
profits on these payments, since the amount of the payment may exceed the
cost of providing the service. Certain of these payments are subject to
limitations under applicable law. Financial intermediaries may categorize and
disclose these arrangements to their clients and to members of the public in
a manner different from the disclosures in the Fund's prospectus and this
Statement of Additional Information. You should ask your financial
intermediary for information about any payments it receives from the Fund,
the Manager or the Distributor and any services it provides, as well as the
fees and commissions it charges.

Although brokers or dealers that sold Fund shares may also act as a
broker or dealer in connection with the execution of the purchase or past
sale of portfolio securities by the Fund or other Oppenheimer funds, a
financial intermediary's sales of shares of the Fund or such other
Oppenheimer funds is not a consideration for the Manager when choosing
brokers or dealers to effect portfolio transactions for the Fund or such
other Oppenheimer funds.

Revenue sharing payments can pay for distribution-related or asset
retention items including, without limitation,

o transactional support, one-time charges for having set up access for
the Fund or other Oppenheimer funds on particular trading systems,
and paying the intermediary's networking fees;
o program support, such as expenses related to including the Oppenheimer
funds in retirement plans, college savings plans, fee-based advisory
or wrap fee programs, fund "supermarkets", bank or trust company
products or insurance companies' variable annuity or variable life
insurance products;
o placement on the dealer's list of offered funds and providing
representatives of the Distributor with access to a financial
intermediary's sales meetings, sales representatives and management
representatives.

Additionally, the Manager or Distributor may make payments for firm
support, such as business planning assistance, advertising, and educating a
financial intermediary's sales personnel about the Oppenheimer funds and
shareholder financial planning needs.

For the year ended December 31, 2005, the following financial
intermediaries that are broker-dealers offering shares of the Oppenheimer
funds, and/or their respective affiliates, received revenue sharing or
similar distribution-related payments from the Manager or Distributor for
marketing or program support:

ADVEST INC. AEGON
A.G. Edwards & Sons, Inc AIG Network
Allianz Life Insurance Company Allstate Life Insurance Company
Ameritas Life Insurance Corporation American Centurian Life Insurance
American Enterprise Life Insurance American Express Financial Advisors
Inc.
American Portfolios Annuity Investors Life
AXA Advisors Banc One Securities Corporation
Bank of New York Cadaret Grant & Co. Inc.
Charter One Securities Inc. Chase Investment Services
Citigroup Financial Network CitiStreet
Citizens Bank of Rhode Island CJM Planning Corp.
Columbus Life Insurance Company Commonwealth Financial Network
CUNA Brokerage Services Inc. CUSO Financial Services, L.P.
Federal Kemper First Allied Securities Inc
First Global Capital GE Financial Assurance
GlenBrook Life and Annuity Co. Great West Life & Annuity Co., Inc.
HD Vest Hewitt Associates
HSBC Brokerage (USA) Inc. ING Network
Jefferson Pilot Securities Corporation John Hancock Variable Life Insurance
Company
Kemper Life Assurance Company Legend Equities Corporation
Legg Mason Wood Walker, Incorporated Lincoln National Life Insurance
Company
Lincoln Financial Advisors Corporation Lincoln Investment Planning
Linsco/Private Ledger Corp. MassMutual Financial Group and
affiliates
McDonald Investments, Inc. Merrill Lynch & Co., Inc. and
affiliates
Metlife and affiliates Minnesota Life Insurance Company
Morgan Stanley DW Inc. NPH Network
Nationwide and affiliates New York Life Securities, LLC
PacLife Network Park Avenue Securities LLC
Planmember Securities Corporation Prime Capital Services, Inc.
Princor Financial Services Corporation Protective Life Insurance Co.
Provident Mutual Insurance Company Prudential Investment Management
Services LLC
Raymond James Financial Services, Inc. Raymond James & Associates, Inc.
RBC Dain Rauscher Inc. Securities America, Inc.
Security Benefit Life Insurance Company Signator Investments
Sun Life Insurance Company Suntrust Investment Services, Inc.
Tower Square Securities, Inc Travelers Life & Annuity Co., Inc.
UBS Financial Services Inc. Union Central Life Insurance Company
Wachovia Securities LLC Wells Fargo Investments, LLC

For the year ended December 31, 2005, the following firms, which in
some cases are broker-dealers, received payments from the Manager or
Distributor for administrative or other services provided (other than revenue
sharing arrangements), as described above:

ABN AMRO ADP
Alliance Benefit Group AMVESCAP Retirement Plans
American Stock & Transfer Baden Retirement
BCG Benefit Administration Co., LLC
Benefit Administration, Inc. Benefit Plans Administrative Services
Benetech, Inc. BISYS Retirement Services
Boston Financial Data Services Ceridian
Circle Trust Company Citigroup
CitiStreet CPI
Daily Access.Com, Inc. Digital Retirement Solutions
Dyatech ERISA Administrative Services, Inc.
ExpertPlan.com FAScore
FBD Consulting Federated Investors
Fidelity Institutional First National Bank of Omaha
First Trust Corp. Franklin Templeton
Geller Group Gold K
Great West Financial Services Hartford Life Insurance Co.
Equities, Inc.
ICMA - RC Services In West Pension Mgmt
Independent Plan Coordinators Ingham Group
Interactive Retirement Systems, Ltd. Invesmart, Inc.
Kaufman & Goble Leggette & Co., Inc.
Manulife MassMutual Financial Group and
affiliates
Matrix Settlement & Clearance Services Mellon HR Solutions
Merrill Lynch & Co., Inc. Metavante
Metlife Securities Inc. MFS Investment Management
Mid Atlantic Capital Corp. Milliman USA
Morgan Stanley DW Inc. National City Bank
National Financial Services Corp. National Investors Services Corp.
Nationwide Investment Service Corp. New York Life Investment Management,
Inc.
Northwest Plan Services Pension Administration and Consulting
PFPC, Inc. PSMI Group
Putnam Fiduciary Trust Company Quads Trust Company
RSM McGladrey SAFECO
Charles Schwab & Co., Inc. Security Trust Company
Sentinel / National Life Standard Insurance Co
Stanley, Hunt, Dupree & Rhine State Street Bank & Trust Company
Suntrust Investment Services, Inc. Swerdlin & Co.
T. Rowe Price Brokerage Services, L.P. Taylor, Perky & Parker, LLC
The 401k Company The Investment Center, Inc.
Trusource Union Bank and Trust Co.
USI Consulting Group Vanguard Group
Web401K.com Wilmington Trust Company

Performance of the Fund

Explanation of Performance Terminology. The Fund uses a variety of terms to
illustrate its investment performance. Those terms include "cumulative total
return," "average annual total return," "average annual total return at net
asset value" and "total return at net asset value." An explanation of how
total returns are calculated is set forth below. The charts below show the
Fund's performance as of the Fund's most recent fiscal year end. You can
obtain current performance information by calling the Fund's Transfer Agent
at 1.800.225.5677 or by visiting the OppenheimerFunds Internet website at
www.oppenheimerfunds.com.

The Fund's illustrations of its performance data in advertisements must
comply with rules of the SEC. Those rules describe the types of performance
data that may be used and how it is to be calculated. In general, any
advertisement by the Fund of its performance data must include the average
annual total returns for the advertised class of shares of the Fund.

Use of standardized performance calculations enables an investor to
compare the Fund's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using the
Fund's performance information as a basis for comparison with other
investments:

o Total returns measure the performance of a hypothetical account in the
Fund over various periods and do not show the performance of each
shareholder's account. Your account's performance will vary from the
model performance data if your dividends are received in cash, or
you buy or sell shares during the period, or you bought your shares
at a different time and price than the shares used in the model.
o The Fund's performance returns do not reflect the effect of taxes on
dividends and capital gains distributions.
o An investment in the Fund is not insured by the FDIC or any other
government agency.
o The principal value of the Fund's shares, and total returns are not
guaranteed and normally will fluctuate on a daily basis.
o When an investor's shares are redeemed, they may be worth more or less
than their original cost.
o Total returns for any given past period represent historical
performance information and are not, and should not be considered, a
prediction of future returns.

The performance of each class of shares is shown separately, because
the performance of each class of shares will usually be different. That is
because of the different kinds of expenses each class bears. The total
returns of each class of shares of the Fund are affected by market
conditions, the quality of the Fund's investments, the maturity of debt
investments, the types of investments the Fund holds, and its operating
expenses that are allocated to the particular class.

|X| Total Return Information. There are different types of "total
returns" to measure the Fund's performance. Total return is the change in
value of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares and that the investment is redeemed at the end of the
period. Because of differences in expenses for each class of shares, the
total returns for each class are separately measured. The cumulative total
return measures the change in value over the entire period (for example, ten
years). An average annual total return shows the average rate of return for
each year in a period that would produce the cumulative total return over the
entire period. However, average annual total returns do not show actual
year-by-year performance. The Fund uses standardized calculations for its
total returns as prescribed by the SEC. The methodology is discussed below.

In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted
from the initial investment ("P" in the formula below) (unless the return is
shown without sales charge, as described below). For Class B shares, payment
of the applicable contingent deferred sales charge is applied, depending on
the period for which the return is shown: 5.0% in the first year, 4.0% in the
second year, 3.0% in the third and fourth years, 2.0% in the fifth year, 1.0%
in the sixth year and none thereafter. For Class C shares, the 1.0%
contingent deferred sales charge is deducted for returns for the one-year
period.

o Average Annual Total Return. The "average annual total return" of each
class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in
value of a hypothetical initial investment of $1,000 ("P" in the formula
below) held for a number of years ("n" in the formula) to achieve an Ending
Redeemable Value ("ERV" in the formula) of that investment, according to the
following formula:

ERV - 1 Average Annual Total
l/n Return
P

o Average Annual Total Return (After Taxes on Distributions). The
"average annual total return (after taxes on distributions)" of Class A
shares is an average annual compounded rate of return for each year in a
specified number of years, adjusted to show the effect of federal taxes
(calculated using the highest individual marginal federal income tax rates in
effect on any reinvestment date) on any distributions made by the Fund during
the specified period. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below)
held for a number of years ("n" in the formula) to achieve an ending value
("ATVD" in the formula) of that investment, after taking into account the
effect of taxes on Fund distributions, but not on the redemption of Fund
shares, according to the following formula:

ATVD - 1 = Average Annual Total Return (After Taxes on
l/n Distributions)
P

o Average Annual Total Return (After Taxes on Distributions and
Redemptions). The "average annual total return (after taxes on distributions
and redemptions)" of Class A shares is an average annual compounded rate of
return for each year in a specified number of years, adjusted to show the
effect of federal taxes (calculated using the highest individual marginal
federal income tax rates in effect on any reinvestment date) on any
distributions made by the Fund during the specified period and the effect of
capital gains taxes or capital loss tax benefits (each calculated using the
highest federal individual capital gains tax rate in effect on the redemption
date) resulting from the redemption of the shares at the end of the period.
It is the rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a number of
years ("n" in the formula) to achieve an ending value ("ATVDR" in the
formula) of that investment, after taking into account the effect of taxes on
Fund distributions and on the redemption of Fund shares, according to the
following formula:

ATVDR - 1 = Average Annual Total Return (After Taxes on Distributions
l/n and Redemptions)
P

o Cumulative Total Return. The "cumulative total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as
average annual total return, but it does not average the rate of return on an
annual basis. Cumulative total return is determined as follows:

ERV - P = Total Return
-----------
P

o Total Returns at Net Asset Value. From time to time the Fund may also
quote a cumulative or an average annual total return "at net asset value"
(without deducting sales charges) for Class A, Class B or Class C shares.
Each is based on the difference in net asset value per share at the beginning
and the end of the period for a hypothetical investment in that class of
shares (without considering front-end or contingent deferred sales charges)
and takes into consideration the reinvestment of dividends and capital gains
distributions.

---------------------------------------------------------------------------------
The Fund's Total Returns for the Periods Ended August 31, 2006
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class of Cumulative Total Average Annual Total Returns
Returns (10 Years or
life-of-class, if
Shares less)(1)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
1-Year 5-Year
(or life of class if
less)(1)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
After Without After Without After Without
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class A(1) -0.21% 6.32% -2.66% 3.28% 0.07% 2.21%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class B(1) 1.01% 4.01% -2.55% 2.46% 0.36% 1.41%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class C(1) 4.12% 4.12% 1.51% 2.51% 1.45% 1.45%
---------------------------------------------------------------------------------
1. Inception of Class A, Class B and Class C: 11/10/03.

-----------------------------------------------------------------
Average Annual Total Returns for Class A Shares (After Sales
Charge)
For the Periods Ended August 31, 2006
-----------------------------------------------------------------
-----------------------------------------------------------------
1-Year 5-Year
(or life of class if
less)(1)
-----------------------------------------------------------------
-----------------------------------------------------------------
After Taxes on Distributions -3.24% -0.37%
-----------------------------------------------------------------
-----------------------------------------------------------------
After Taxes on -1.74% -0.19%
Distributions and
Redemption of Fund Shares
-----------------------------------------------------------------
1. Inception of Class A shares: 11/10/03.

Other Performance Comparisons. The Fund compares its performance annually to
that of an appropriate broadly-based market index in its Annual Report to
shareholders. You can obtain that information by contacting the Transfer
Agent at the addresses or telephone numbers shown on the cover of this
Statement of Additional Information. The Fund may also compare its
performance to that of other investments, including other mutual funds, or
use rankings of its performance by independent ranking entities. Examples of
these performance comparisons are set forth below.

|X| Lipper Rankings. From time to time the Fund may publish the
ranking of the performance of its classes of shares by Lipper, Inc.
("Lipper"). Lipper is a widely-recognized independent mutual fund monitoring
service. Lipper monitors the performance of regulated investment companies,
including the Fund, and ranks their performance for various periods in
categories based on investment styles. The Lipper performance rankings are
based on total returns that include the reinvestment of capital gain
distributions and income dividends but do not take sales charges or taxes
into consideration. Lipper also publishes "peer-group" indices of the
performance of all mutual funds in a category that it monitors and averages
of the performance of the funds in particular categories.

|X| Morningstar Ratings. From time to time the Fund may publish the star
rating of the performance of its classes of shares by Morningstar, Inc., an
independent mutual fund monitoring service. Morningstar rates mutual funds in
their specialized market sector. The Fund is rated among domestic hybrid
funds.

Morningstar proprietary star ratings reflect historical risk-adjusted
total investment return. For each fund with at least a three-year history,
Morningstar calculates a Morningstar Rating(TM)based on a Morningstar
Risk-Adjusted Return measure that accounts for variation in a fund's monthly
performance (including the effects of sales charges, loads, and redemption
fees), placing more emphasis on downward variations and rewarding consistent
performance. The top 10% of funds in each category receive 5 stars, the next
22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2
stars, and the bottom 10% receive 1 star. (Each share class is counted as a
fraction of one fund within this scale and rated separately, which may cause
slight variations in the distribution percentages.) The Overall Morningstar
Rating for a fund is derived from a weighted average of the performance
figures associated with its three-, five-and ten-year (if applicable)
Morningstar Rating metrics.

|X| Performance Rankings and Comparisons by Other Entities and
Publications. From time to time the Fund may include in its advertisements
and sales literature performance information about the Fund cited in
newspapers and other periodicals such as The New York Times, The Wall Street
Journal, Barron's, or similar publications. That information may include
performance quotations from other sources, including Lipper and Morningstar.
The performance of the Fund's classes of shares may be compared in
publications to the performance
of various market indices or other investments, and averages, performance
rankings or other benchmarks prepared by recognized mutual fund statistical
services.

Investors may also wish to compare the returns on the Fund's share
classes to the return on fixed-income investments available from banks and
thrift institutions. Those include certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed or
variable time deposits, and various other instruments such as Treasury bills.
However, the Fund's returns and share price are not guaranteed or insured by
the FDIC or any other agency and will fluctuate daily, while bank depository
obligations may be insured by the FDIC and may provide fixed rates of return.
Repayment of principal and payment of interest on Treasury securities is
backed by the full faith and credit of the U.S. government.

From time to time, the Fund may publish rankings or ratings of the
Manager or Transfer Agent, and of the investor services provided by them to
shareholders of the Oppenheimer funds, other than performance rankings of the
Oppenheimer funds themselves. Those ratings or rankings of shareholder and
investor services by third parties may include comparisons of their services
to those provided by other mutual fund families selected by the rating or
ranking services. They may be based upon the opinions of the rating or
ranking service itself, using its research or judgment, or based upon surveys
of investors, brokers, shareholders or others.

From time to time the Fund may include in its advertisements and sales
literature the total return performance of a hypothetical investment account
that includes shares of the Fund and other Oppenheimer funds. The combined
account may be part of an illustration of an asset allocation model or
similar presentation. The account performance may combine total return
performance of the Fund and the total return performance of other Oppenheimer
funds included in the account. Additionally, from time to time, the Fund's
advertisements and sales literature may include, for illustrative or
comparative purposes, statistical data or other information about general or
specific market and economic conditions. That may include, for example,
o information about the performance of certain securities or commodities
markets or segments of those markets,
o information about the performance of the economies of particular
countries or regions,
o the earnings of companies included in segments of particular
industries, sectors, securities markets, countries or regions,
o the availability of different types of securities or offerings of
securities,
o information relating to the gross national or gross domestic product of
the United States or other countries or regions,
o comparisons of various market sectors or indices to demonstrate
performance, risk, or other characteristics of the Fund.

About Your Account

Appendix B contains more information about the special sales charge
arrangements offered by the Fund, and the circumstances in which sales
charges may be reduced.

Classes of Shares. Each class of shares of the Fund represents an interest in
the same portfolio of investments of the Fund. However, each class has
different shareholder privileges and features. The net income attributable to
Class B Class C shares and the dividends payable on Class B or Class C shares
will be reduced by incremental expenses borne solely by that class. Those
expenses include the asset-based sales charges to which Class B and Class C
shares are subject.

The availability of different classes of shares permitted an investor
to choose the method of purchasing shares that was more appropriate for the
investor. That may have depended on the amount of the purchase, the length of
time the investor expected to hold shares, and other relevant circumstances.
Class A shares typically were sold subject to an initial sales charge. While
Class B and Class C shares had no initial sales charge, the purpose of the
deferred sales charge and asset-based sales charge on Class B and Class C
shares is the same as that of the initial sales charge on Class A shares - to
compensate the Distributor and brokers, dealers and financial institutions
that sold shares of the Fund. A salesperson who is entitled to receive
compensation from his or her firm for selling Fund shares may receive
different levels of compensation for selling one class of shares rather than
another.

|X| Class A Shares Subject to a Contingent Deferred Sales Charge. For
purchases of Class A shares at net asset value whether or not subject to a
contingent deferred sales charge, as described in the Prospectus, no sales
concessions were paid to the broker-dealer of record on sales of Class A
shares purchased with the redemption proceeds of shares of another mutual
fund offered as an investment option in a retirement plan in which
Oppenheimer funds are also offered as investment options under a special
arrangement with the Distributor, if the purchase occurred more than 30 days
after the Oppenheimer funds were added as an investment option under that
plan. Additionally, that concession was not be paid on purchases of Class A
shares by a retirement plan made with the redemption proceeds of Class N
shares of one or more Oppenheimer funds held by the plan for more than 18
months.

|X| Class B Conversion. Under current interpretations of applicable
federal income tax law by the Internal Revenue Service, the conversion of
Class B shares to Class A shares 88 months from the date of purchase is not
treated as a taxable event for the shareholder. If those laws or the IRS
interpretation of those laws should change, the automatic conversion feature
may be suspended. In that event, no further conversions of Class B shares
would occur while that suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative net asset
value of the two classes, without the imposition of a sales charge or fee,
such exchange could constitute a taxable event for the shareholder, and
absent such exchange, Class B shares might continue to be subject to the
asset-based sales charge for longer than 88 months.

|X| Allocation of Expenses. The Fund pays expenses related to its daily
operations, such as custodian fees, Trustees' fees, transfer agency fees,
legal fees and auditing costs. Those expenses are paid out of the Fund's
assets and are not paid directly by shareholders. However, those expenses
reduce the net asset values of shares, and therefore are indirectly borne by
shareholders through their investment.

The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are
allocated pro rata to the shares of all classes. The allocation is based on
the percentage of the Fund's total assets that is represented by the assets
of each class, and then equally to each outstanding share within a given
class. Such general expenses include management fees, legal, bookkeeping and
audit fees, printing and mailing costs of shareholder reports, Prospectuses,
Statements of Additional Information and other materials for current
shareholders, fees to unaffiliated Trustees, custodian expenses, share
issuance costs, organization and start-up costs, interest, taxes and
brokerage commissions, and non-recurring expenses, such as litigation costs.

Other expenses that are directly attributable to a particular class are
allocated equally to each outstanding share within that class. Examples of
such expenses include distribution and service plan (12b-1) fees, transfer
and shareholder servicing agent fees and expenses, and shareholder meeting
expenses (to the extent that such expenses pertain only to a specific class).

Fund Account Fees. As stated in the Prospectus, a $12 annual "Minimum Balance
Fee" is assessed on each Fund account with a share balance valued under $500.
The Minimum Balance Fee is automatically deducted from each such Fund account
in September.

Listed below are certain cases in which the Fund has elected, in its
discretion, not to assess the Fund Account Fees. These exceptions are subject
to change:
o A fund account whose shares were acquired after September 30th of the
prior year;
o A fund account that has a balance below $500 due to the automatic
conversion of shares from Class B to Class A shares. However,
once all Class B shares held in the account have been converted
to Class A shares the new account balance may become subject to
the Minimum Balance Fee;
o Accounts of shareholders who elect to access their account documents
electronically via eDoc Direct;
o A fund account that has only certificated shares and, has a balance
below $500 and is being escheated;
o Accounts of shareholders that are held by broker-dealers under the NSCC
Fund/SERV system;
o Accounts held under the Oppenheimer Legacy Program and/or holding
certain Oppenheimer Variable Account Funds; and
o A fund account that falls below the $500 minimum solely due to market
fluctuations within the 12-month period preceding the date the
fee is deducted.

To access account documents electronically via eDocs Direct, please
visit the Service Center on our website at www.oppenheimerfunds.com or call
1.888.470.0862 for instructions.

The Fund reserves the authority to modify Fund Account Fees in its
discretion.

Determination of Net Asset Values Per Share. The net asset values per share
of each class of shares of the Fund are determined as of the close of
business of the New York Stock Exchange (the "NYSE") on each day that the
NYSE is open. The calculation is done by dividing the value of the Fund's net
assets attributable to a class by the number of shares of that class that are
outstanding. The NYSE normally closes at 4:00 p.m., Eastern time, but may
close earlier on some other days (for example, in case of weather emergencies
or on days falling before a U.S. holiday). All references to time in this
Statement of Additional Information mean "Eastern time." The NYSE's most
recent annual announcement (which is subject to change) states that it will
close on New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days.

Dealers other than NYSE members may conduct trading in certain
securities on days on which the NYSE is closed (including weekends and
holidays) or after 4:00 p.m. on a regular business day. Because the Fund's
net asset values will not be calculated on those days, the Fund's net asset
values per share may be significantly affected on such days when shareholders
may not purchase or redeem shares. Additionally, with respect to certain
securities held by the Underlying Fund, trading on European and Asian stock
exchanges and over-the-counter markets normally is completed before the close
of the NYSE.

Changes in the values of securities held by the Underlying Fund and
traded on foreign exchanges or markets as a result of events that occur after
the prices of those securities are determined, but before the close of the
NYSE, will not be reflected in the Underlying Fund's calculation of its net
asset values that day unless the Manager determines that the event is likely
to effect a material change in the value of the security. The Manager, or an
internal valuation committee established by the Manager, as applicable, may
establish a valuation, under procedures established by the Board and subject
to the approval, ratification and confirmation by the Board at its next
ensuing meeting.

|X| Securities Valuation. The Fund's Board of Trustees has established
procedures for the valuation of the Fund's securities. In general those
procedures are as follows:
o Long-term debt securities having a remaining maturity in excess of 60
days are valued based on the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Fund's Board of
Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry.
o The following securities are valued at the mean between the "bid" and
"asked" prices determined by a pricing service approved by the Fund's Board
of Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry:
(1) debt instruments that have a maturity of more than 397 days when
issued,
(2) debt instruments that had a maturity of 397 days or less when issued
and have a remaining maturity of more than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days or
less when issued and which have a remaining maturity of 60
days or less.
o The following securities are valued at cost, adjusted for amortization
of premiums and accretion of discounts:
(1) money market debt securities held by a non-money market fund that had a
maturity of less than 397 days when issued that have a
remaining maturity of 60 days or less, and
(2) debt instruments held by a money market fund that have a remaining
maturity of 397 days or less.
o Securities (including restricted securities) not having
readily-available market quotations are valued at fair value determined under
the Board's procedures. If the Manager is unable to locate two market makers
willing to give quotes, a security may be priced at the mean between the
"bid" and "asked" prices provided by a single active market maker (which in
certain cases may be the "bid" price if no "asked" price is available).

How to Sell Shares

The information below supplements the terms and conditions for redeeming
shares set forth in the Prospectus.

Sending Redemption Proceeds by Federal Funds Wire. The Federal Funds wire of
redemption proceeds may be delayed if the Fund's custodian bank is not open
for business on a day when the Fund would normally authorize the wire to be
made, which is usually the Fund's next regular business day following the
redemption. In those circumstances, the wire will not be transmitted until
the next bank business day on which the Fund is open for business. No
dividends will be paid on the proceeds of redeemed shares awaiting transfer
by Federal Funds wire.

Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of:
o Class A shares purchased subject to an initial sales charge or Class A
shares on which a contingent deferred sales charge was paid, or
o Class B shares that were subject to the Class B contingent deferred
sales charge when redeemed.

The reinvestment may be made without sales charge only in Class A
shares of the Fund if the reinvestment occurs during the Post-Warranty Period
or, if the reinvestment occurs during the Warranty Period, in any of the
other Oppenheimer funds into which shares of the Fund are exchangeable as
described in "How to Exchange Shares" below. Reinvestment will be at the net
asset value next computed after the Transfer Agent receives the reinvestment
order. The shareholder must ask the Transfer Agent for that privilege at the
time of reinvestment. This privilege does not apply to Class C shares. The
Fund may amend, suspend or cease offering this reinvestment privilege at any
time as to shares redeemed after the date of such amendment, suspension or
cessation.

Any capital gain that was realized when the shares were redeemed is
taxable, and reinvestment will not alter any capital gains tax payable on
that gain. If there has been a capital loss on the redemption, some or all of
the loss may not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption proceeds of
Fund shares on which a sales charge was paid are reinvested in shares of the
Fund or another of the Oppenheimer funds within 90 days of payment of the
sales charge, the shareholder's basis in the shares of the Fund that were
redeemed may not include the amount of the sales charge paid. That would
reduce the loss or increase the gain recognized from the redemption. However,
in that case the sales charge would be added to the basis of the shares
acquired by the reinvestment of the redemption proceeds.

Payments "In Kind." The Prospectus states that payment for shares tendered
for redemption is ordinarily made in cash. However, under certain
circumstances, the Board of Trustees of the Fund may determine that it would
be detrimental to the best interests of the remaining shareholders of the
Fund to make payment of a redemption order wholly or partly in cash. In that
case, the Fund may pay the redemption proceeds in whole or in part by a
distribution "in kind" of liquid securities from the portfolio of the Fund,
in lieu of cash.

The Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act. Under that rule, the Fund is obligated to redeem shares solely
in cash up to the lesser of $250,000 or 1% of the net assets of the Fund
during any 90-day period for any one shareholder. If shares are redeemed in
kind, the redeeming shareholder might incur brokerage or other costs in
selling the securities for cash. The Fund will value securities used to pay
redemptions in kind using the same method the Fund uses to value its
portfolio securities described above under "Determination of Net Asset Values
Per Share." That valuation will be made as of the time the redemption price
is determined.

Involuntary Redemptions. The Fund's Board of Trustees has the right to cause
the involuntary redemption of the shares held in any account if the aggregate
net asset value of those shares is less than $500 or such lesser amount as
the Board may fix. The Board will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of such shares has
fallen below the stated minimum solely as a result of market fluctuations. If
the Board exercises this right, it may also fix the requirements for any
notice to be given to the shareholders in question (not less than 30 days).
The Board may alternatively set requirements for the shareholder to increase
the investment, or set other terms and conditions so that the shares would
not be involuntarily redeemed.

Transfers of Shares. A transfer of shares to a different registration is not
an event that triggers the payment of sales charges. Therefore, shares are
not subject to the payment of a contingent deferred sales charge of any class
at the time of transfer to the name of another person or entity. It does not
matter whether the transfer occurs by absolute assignment, gift or bequest,
as long as it does not involve, directly or indirectly, a public sale of the
shares. When shares subject to a contingent deferred sales charge are
transferred, the transferred shares will remain subject to the contingent
deferred sales charge. It will be calculated as if the transferee shareholder
had acquired the transferred shares in the same manner and at the same time
as the transferring shareholder.

If less than all shares held in an account are transferred, and some
but not all shares in the account would be subject to a contingent deferred
sales charge if redeemed at the time of transfer, the priorities described in
the Prospectus under "How to Sell Shares" for the imposition of the Class B
and Class C contingent deferred sales charge will be followed in determining
the order in which shares are transferred.

Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, SEP-IRAs, SIMPLE IRAs, 403(b)(7) custodial
plans or pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address
listed in "How to Sell Shares" in the Prospectus or on the back cover of this
Statement of Additional Information. The request must:
(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is
premature; and
(3) conform to the requirements of the plan and the Fund's other redemption
requirements.

Participants (other than self-employed plan sponsors) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Fund held in the name of the plan or its fiduciary may not directly request
redemption of their accounts. The plan administrator or fiduciary must sign
the request.

Distributions from pension and profit sharing plans are subject to
special requirements under the Internal Revenue Code and certain documents
(available from the Transfer Agent) must be completed and submitted to the
Transfer Agent before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the Internal
Revenue Code, and IRS Form W-4P (available from the Transfer Agent) must be
submitted to the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided the Transfer
Agent with a certified tax identification number, the Internal Revenue Code
requires that tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Fund, the Manager, the Distributor, and
the Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not be
responsible for any tax penalties assessed in connection with a distribution.

Special Arrangements for Repurchase of Shares from Dealers and Brokers. The
Distributor is the Fund's agent to repurchase its shares from authorized
dealers or brokers on behalf of their customers. Shareholders should contact
their broker or dealer to arrange this type of redemption. The repurchase
price per share will be the net asset value next computed after the
Distributor receives an order placed by the dealer or broker. However, if the
Distributor receives a repurchase order from a dealer or broker after the
close of the NYSE on a regular business day, it will be processed at that
day's net asset value if the order was received by the dealer or broker from
its customers prior to the time the NYSE closes. Normally, the NYSE closes at
4:00 p.m., but may do so earlier on some days.

Ordinarily, for accounts redeemed by a broker-dealer under this
procedure, payment will be made within three business days after the shares
have been redeemed upon the Distributor's receipt of the required redemption
documents in proper form. The signature(s) of the registered owners on the
redemption documents must be guaranteed as described in the Prospectus.

How to Exchange Shares

As stated in the Prospectus, shares of a particular class of Oppenheimer
funds having more than one class of shares may be exchanged only for shares
of the same class of other Oppenheimer funds. Shares of Oppenheimer funds
that have a single class without a class designation are deemed "Class A"
shares for this purpose. You can obtain a current list showing which funds
offer which classes of shares by calling the Distributor.

o All of the Oppenheimer funds currently offer Class A, B, C, N and Y
shares with the following exceptions:

The following funds only offer Class A shares:
Centennial California Tax Exempt Trust Centennial New York Tax Exempt Trust
Centennial Government Trust Centennial Tax Exempt Trust
Centennial Money Market Trust

The following funds do not offer Class N shares:
Limited Term New York Municipal Fund Oppenheimer Rochester Arizona
Municipal Fund
Oppenheimer AMT-Free Municipals Oppenheimer Rochester Maryland
Municipal Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer Rochester Massachusetts
Municipal Fund
Oppenheimer California Municipal Fund Oppenheimer Rochester Michigan
Municipal Fund
Oppenheimer Institutional Money Market Oppenheimer Rochester Minnesota
Fund Municipal Fund
Oppenheimer International Value Fund Oppenheimer Rochester National
Municipals
Oppenheimer Limited Term California Oppenheimer Rochester North Carolina
Municipal Fund Municipal Fund
Oppenheimer Limited Term Municipal Fund Oppenheimer Rochester Ohio Municipal
Fund
Oppenheimer Money Market Fund, Inc. Oppenheimer Rochester Virginia
Municipal Fund
Oppenheimer New Jersey Municipal Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Principal Protected Main Rochester Fund Municipals
Street Fund II
Oppenheimer Pennsylvania Municipal Fund

The following funds do not offer Class Y shares:
Limited Term New York Municipal Fund Oppenheimer Principal Protected Main
Street Fund
Oppenheimer AMT-Free Municipals Oppenheimer Principal Protected Main
Street Fund II
Oppenheimer AMT-Free New York Municipals Oppenheimer Principal Protected Main
Street Fund III
Oppenheimer Balanced Fund Oppenheimer Quest Capital Value Fund,
Inc.
Oppenheimer California Municipal Fund Oppenheimer Quest International Value
Fund, Inc.
Oppenheimer Capital Income Fund Oppenheimer Rochester Arizona Municipal
Fund
Oppenheimer Cash Reserves Oppenheimer Rochester Maryland
Municipal Fund
Oppenheimer Convertible Securities Fund Oppenheimer Rochester Massachusetts
Municipal Fund
Oppenheimer Dividend Growth Fund Oppenheimer Rochester Michigan
Municipal Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Rochester Minnesota
Municipal Fund
Oppenheimer Institutional Money Market Oppenheimer Rochester National
Fund Municipals
Oppenheimer Limited Term California Oppenheimer Rochester North Carolina
Municipal Fund Municipal Fund
Oppenheimer Limited Term Municipal Fund Oppenheimer Rochester Ohio Municipal
Fund
Oppenheimer New Jersey Municipal Fund Oppenheimer Rochester Virginia
Municipal Fund
Oppenheimer Pennsylvania Municipal Fund

o Class B and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other
Oppenheimer funds or through OppenheimerFunds-sponsored 401(k) plans.
o Class M shares of Oppenheimer Convertible Securities Fund may be
exchanged only for Class A shares of other Oppenheimer funds. They may
not be acquired by exchange of shares of any class of any other
Oppenheimer funds except Class A shares of Oppenheimer Money Market
Fund, Inc. or Oppenheimer Cash Reserves acquired by exchange of Class M
shares.
o Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any money market fund offered by the Distributor. Shares
of any money market fund purchased without a sales charge may be
exchanged for shares of Oppenheimer funds offered with a sales charge
upon payment of the sales charge.
o Shares of the Fund acquired by reinvestment of dividends or
distributions from any of the other Oppenheimer funds or from any unit
investment trust for which reinvestment arrangements have been made
with the Distributor may be exchanged at net asset value for shares of
the same class of any of the other Oppenheimer funds into which you may
exchange shares.
o Shares of Oppenheimer Principal Protected Main Street Fund may be
exchanged at net asset value for shares of the same class of any of the
other Oppenheimer funds into which you may exchange shares. However,
shareholders are not permitted to exchange shares of other Oppenheimer
funds for shares of Oppenheimer Principal Protected Main Street Fund
until after the expiration of the warranty period (8/5/2010).
o Shares of Oppenheimer Principal Protected Main Street Fund II may be
exchanged at net asset value for shares of the same class of any of the
other Oppenheimer funds into which you may exchange shares. However,
shareholders are not permitted to exchange shares of other Oppenheimer
funds for shares of Oppenheimer Principal Protected Main Street Fund II
until after the expiration of the warranty period (3/3/2011).
o Shares of Oppenheimer Principal Protected Main Street Fund III may be
exchanged at net asset value for shares of the same class of any of the
other Oppenheimer funds into which you may exchange shares. However,
shareholders are not permitted to exchange shares of other Oppenheimer
funds for shares of Oppenheimer Principal Protected Main Street Fund
III until after the expiration of the warranty period (12/16/2011).
o Class A, Class B, Class C and Class N shares of each of Oppenheimer
Developing Markets Fund and Oppenheimer International Small Company
Fund may be acquired by exchange only with a minimum initial investment
of $50,000. An existing shareholder of each fund may make additional
exchanges into that fund with as little as $50.

The Fund may amend, suspend or terminate the exchange privilege at any
time. Although the Fund may impose these changes at any time, it will provide
you with notice of those changes whenever it is required to do so by
applicable law. It may be required to provide 60 days' notice prior to
materially amending or terminating the exchange privilege. That 60 day notice
is not required in extraordinary circumstances.

|X| How Exchanges Affect Contingent Deferred Sales Charges. No
contingent deferred sales charge is imposed on exchanges of shares of any
class purchased subject to a contingent deferred sales charge, with the
following exceptions:

o When Class A shares of any Oppenheimer fund (other than Rochester
National Municipals and Rochester Fund Municipals) acquired by exchange of
Class A shares of any Oppenheimer fund purchased subject to a Class A
contingent deferred sales charge are redeemed within 18 months measured from
the beginning of the calendar month of the initial purchase of the exchanged
Class A shares, the Class A contingent deferred sales charge is imposed on
the redeemed shares.

o When Class A shares of Rochester National Municipals and Rochester Fund
Municipals acquired by exchange of Class A shares of any Oppenheimer fund
purchased subject to a Class A contingent deferred sales charge are redeemed
within 24 months of the beginning of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A contingent deferred
sales charge is imposed on the redeemed shares.

o If any Class A shares of another Oppenheimer fund that are exchanged
for Class A shares of Oppenheimer Senior Floating Rate Fund are subject to
the Class A contingent deferred sales charge of the other Oppenheimer fund at
the time of exchange, the holding period for that Class A contingent deferred
sales charge will carry over to the Class A shares of Oppenheimer Senior
Floating Rate Fund acquired in the exchange. The Class A shares of
Oppenheimer Senior Floating Rate Fund acquired in that exchange will be
subject to the Class A Early Withdrawal Charge of Oppenheimer Senior Floating
Rate Fund if they are repurchased before the expiration of the holding period.

o When Class A shares of Oppenheimer Cash Reserves and Oppenheimer Money
Market Fund, Inc. acquired by exchange of Class A shares of any Oppenheimer
fund purchased subject to a Class A contingent deferred sales charge are
redeemed within the Class A holding period of the fund from which the shares
were exchanged, the Class A contingent deferred sales charge of the fund from
which the shares were exchanged is imposed on the redeemed shares.

o Except with respect to the Class B shares described in the next two
paragraphs, the contingent deferred sales charge is imposed on Class B shares
acquired by exchange if they are redeemed within six years of the initial
purchase of the exchanged Class B shares.

o With respect to Class B shares of Oppenheimer Limited Term California
Municipal Fund, Oppenheimer Limited-Term Government Fund, Oppenheimer Limited
Term Municipal Fund, Limited Term New York Municipal Fund and Oppenheimer
Senior Floating Rate Fund, the Class B contingent deferred sales charge is
imposed on the acquired shares if they are redeemed within five years of the
initial purchase of the exchanged Class B shares.

o With respect to Class B shares of Oppenheimer Cash Reserves that were
acquired through the exchange of Class B shares initially purchased in the
Oppenheimer Capital Preservation Fund, the Class B contingent deferred sales
charge is imposed on the acquired shares if they are redeemed within five
years of that initial purchase.

o With respect to Class C shares, the Class C contingent deferred sales
charge is imposed on Class C shares acquired by exchange if they are redeemed
within 12 months of the initial purchase of the exchanged Class C shares.

o When Class B, or Class C shares are redeemed to effect an exchange, the
priorities described in "How To Sell Shares" in the Prospectus for the
imposition of the Class B, or Class C contingent deferred sales charge will
be followed in determining the order in which the shares are exchanged.
Before exchanging shares, shareholders should take into account how the
exchange may affect any contingent deferred sales charge that might be
imposed in the subsequent redemption of remaining shares.

Shareholders owning shares of more than one class must specify which
class of shares they wish to exchange.

|X| Limits on Multiple Exchange Orders. The Fund reserves the right
to reject telephone or written exchange requests submitted in bulk by anyone
on behalf of more than one account.

|X| Telephone Exchange Requests. When exchanging shares by telephone,
a shareholder must have an existing account in the fund to which the exchange
is to be made. Otherwise, the investors must obtain a prospectus of that fund
before the exchange request may be submitted. If all telephone lines are busy
(which might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.

Processing Exchange Requests. Shares to be exchanged are redeemed on
the regular business day the Transfer Agent receives an exchange request in
proper form (the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases may be
delayed by either fund up to five business days if it determines that it
would be disadvantaged by an immediate transfer of the redemption proceeds.
The Fund reserves the right, in its discretion, to refuse any exchange
request that may disadvantage it. For example, if the receipt of multiple
exchange requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the Fund,
the Fund may refuse the request.

When you exchange some or all of your shares from one fund to another,
any special account feature such as an Asset Builder Plan or Automatic
Withdrawal Plan, will be switched to the new fund account unless you tell the
Transfer Agent not to do so. However, special redemption and exchange
features such as Automatic Exchange Plans and Automatic Withdrawal Plans
cannot be switched to an account in Oppenheimer Senior Floating Rate Fund.

In connection with any exchange request, the number of shares exchanged
may be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information, or would include shares covered by a
share certificate that is not tendered with the request. In those cases, only
the shares available for exchange without restriction will be exchanged.

The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks. A shareholder should assure that
the fund selected is appropriate for his or her investment and should be
aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of one
fund and a purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of redemption proceeds
in such cases. The Fund, the Distributor, and the Transfer Agent are unable
to provide investment, tax or legal advice to a shareholder in connection
with an exchange request or any other investment transaction.

Dividends, Capital Gains and Taxes

Dividends and Distributions. The Fund has no fixed dividend rate and there
can be no assurance as to the payment of any dividends or the realization of
any capital gains. The dividends and distributions paid by a class of shares
will vary from time to time depending on market conditions, the composition
of the Fund's portfolio, and expenses borne by the Fund or borne separately
by a class. Dividends are calculated in the same manner, at the same time,
and on the same day for each class of shares. However, dividends on Class B
and Class C shares are expected to be lower than dividends on Class A shares.
That is because of the effect of the asset-based sales charge on Class B and
Class C shares. Those dividends will also differ in amount as a consequence
of any difference in the net asset values of the different classes of shares.

Dividends, distributions and proceeds of the redemption of Fund shares
represented by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be invested in shares of Oppenheimer Money Market Fund,
Inc. Reinvestment will be made as promptly as possible after the return of
such checks to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds. Unclaimed accounts may be subject to state escheatment
laws, and the Fund and the Transfer Agent will not be liable to shareholders
or their representatives for compliance with those laws in good faith.

Tax Status of the Fund's Dividends, Distributions and Redemptions of Shares.
The federal tax treatment of the Fund's dividends and capital gains
distributions is briefly highlighted in the Prospectus. The following is only
a summary of certain additional tax considerations generally affecting the
Fund and its shareholders.

The tax discussion in the Prospectus and this Statement of Additional
Information is based on tax law in effect on the date of the Prospectus and
this Statement of Additional Information. Those laws and regulations may be
changed by legislative, judicial, or administrative action, sometimes with
retroactive effect. State and local tax treatment of ordinary income
dividends and capital gain dividends from regulated investment companies may
differ from the treatment under the Internal Revenue Code described below.
Shareholders are urged to consult their tax advisers with specific reference
to their own tax circumstances as well as the consequences of federal, state
and local tax rules affecting an investment in the Fund.

Qualification as a Regulated Investment Company. The Fund has elected to be
taxed as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. As a regulated investment company, the Fund
is not subject to federal income tax on the portion of its net investment
income (that is, taxable interest, dividends, and other taxable ordinary
income, net of expenses) and capital gain net income (that is, the excess of
net long-term capital gains over net short-term capital losses) that it
distributes to shareholders. That qualification enables the Fund to "pass
through" its income and realized capital gains to shareholders without having
to pay tax on them. This avoids a "double tax" on that income and capital
gains, since shareholders normally will be taxed on the dividends and capital
gains they receive from the Fund (unless their Fund shares are held in a
retirement account or the shareholder is otherwise exempt from tax).

The Internal Revenue Code contains a number of complex tests relating
to qualification that the Fund might not meet in a particular year. If it did
not qualify as a regulated investment company, the Fund would be treated for
tax purposes as an ordinary corporation and would receive no tax deduction
for payments made to shareholders.

To qualify as a regulated investment company, the Fund must distribute
at least 90% of its investment company taxable income (in brief, net
investment income and the excess of net short-term capital gain over net
long-term capital loss) for the taxable year. The Fund must also satisfy
certain other requirements of the Internal Revenue Code, some of which are
described below. Distributions by the Fund made during the taxable year or,
under specified circumstances, within 12 months after the close of the
taxable year, will be considered distributions of income and gains for the
taxable year and will therefore count toward satisfaction of the
above-mentioned requirement.

To qualify as a regulated investment company, the Fund must derive at
least 90% of its gross income from dividends, interest, certain payments with
respect to securities loans, gains from the sale or other disposition of
stock or securities or foreign currencies (to the extent such currency gains
are directly related to the regulated investment company's principal business
of investing in stock or securities) and certain other income.

In addition to satisfying the requirements described above, the Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under that test, at the close of each quarter of the
Fund's taxable year, at least 50% of the value of the Fund's assets must
consist of cash and cash items (including receivables), U.S. government
securities, securities of other regulated investment companies, and
securities of other issuers. As to each of those issuers, the Fund must not
have invested more than 5% of the value of the Fund's total assets in
securities of each such issuer and the Fund must not hold more than 10% of
the outstanding voting securities of each such issuer. No more than 25% of
the value of its total assets may be invested in the securities of any one
issuer (other than U.S. government securities and securities of other
regulated investment companies), or in two or more issuers which the Fund
controls and which are engaged in the same or similar trades or businesses.
For purposes of this test, obligations issued or guaranteed by certain
agencies or instrumentalities of the U.S. government are treated as U.S.
government securities.

Excise Tax on Regulated Investment Companies. Under the Internal Revenue
Code, by December 31 each year, the Fund must distribute 98% of its taxable
investment income earned from January 1 through December 31 of that year and
98% of its capital gains realized in the period from November 1 of the prior
year through October 31 of the current year. If it does not, the Fund must
pay an excise tax on the amounts not distributed. It is presently anticipated
that the Fund will meet those requirements. To meet this requirement, in
certain circumstances the Fund might be required to liquidate portfolio
investments to make sufficient distributions to avoid excise tax liability.
However, the Board of Trustees and the Manager might determine in a
particular year that it would be in the best interests of shareholders for
the Fund not to make such distributions at the required levels and to pay the
excise tax on the undistributed amounts. That would reduce the amount of
income or capital gains available for distribution to shareholders.

Taxation of Fund Distributions. The Fund anticipates distributing
substantially all of its investment company taxable income for each taxable
year. Those distributions will be taxable to shareholders as ordinary income
and treated as dividends for federal income tax purposes.

Special provisions of the Internal Revenue Code govern the eligibility
of the Fund's dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not eligible for the
deduction. The amount of dividends paid by the Fund that may qualify for the
deduction is limited to the aggregate amount of qualifying dividends that the
Fund derives from portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be eligible for the
deduction on dividends paid on Fund shares held for 45 days or less. To the
extent the Fund's dividends are derived from gross income from option
premiums, interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for the
deduction.

The Fund may either retain or distribute to shareholders its net
capital gain for each taxable year. The Fund currently intends to distribute
any such amounts. If net long term capital gains are distributed and
designated as a capital gain distribution, it will be taxable to shareholders
as a long-term capital gain and will be properly identified in reports sent
to shareholders in January of each year. Such treatment will apply no matter
how long the shareholder has held his or her shares or whether that gain was
recognized by the Fund before the shareholder acquired his or her shares.

If the Fund elects to retain its net capital gain, the Fund will be
subject to tax on it at the 35% corporate tax rate. If the Fund elects to
retain its net capital gain, the Fund will provide to shareholders of record
on the last day of its taxable year information regarding their pro rata
share of the gain and tax paid. As a result, each shareholder will be
required to report his or her pro rata share of such gain on their tax return
as long-term capital gain, will receive a refundable tax credit for his/her
pro rata share of tax paid by the Fund on the gain, and will increase the tax
basis for his/her shares by an amount equal to the deemed distribution less
the tax credit.

Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of, or exemption from, taxes on such
income.

Distributions by the Fund that do not constitute ordinary income
dividends or capital gain distributions will be treated as a return of
capital to the extent of the shareholder's tax basis in their shares. Any
excess will be treated as gain from the sale of those shares, as discussed
below. Shareholders will be advised annually as to the U.S. federal income
tax consequences of distributions made (or deemed made) during the year. If
prior distributions made by the Fund must be re-characterized as a
non-taxable return of capital at the end of the fiscal year as a result of
the effect of the Fund's investment policies, they will be identified as such
in notices sent to shareholders.

Distributions by the Fund will be treated in the manner described above
regardless of whether the distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares
received, determined as of the reinvestment date.

The Fund will be required in certain cases to withhold 28% of ordinary
income dividends, capital gains distributions and the proceeds of the
redemption of shares, paid to any shareholder (1) who has failed to provide a
correct taxpayer identification number or to properly certify that number
when required, (2) who is subject to backup withholding for failure to report
the receipt of interest or dividend income properly, or (3) who has failed to
certify to the Fund that the shareholder is not subject to backup withholding
or is an "exempt recipient" (such as a corporation). Any tax withheld by the
Fund is remitted by the Fund to the U.S. Treasury and all income and any tax
withheld is identified in reports mailed to shareholders in January of each
year with a copy sent to the IRS.

Tax Effects of Redemptions of Shares. If a shareholder redeems all or a
portion of his/her shares, the shareholder will recognize a gain or loss on
the redeemed shares in an amount equal to the difference between the proceeds
of the redeemed shares and the shareholder's adjusted tax basis in the
shares. All or a portion of any loss recognized in that manner may be
disallowed if the shareholder purchases other shares of the Fund within 30
days before or after the redemption.

In general, any gain or loss arising from the redemption of shares of
the Fund will be considered capital gain or loss, if the shares were held as
a capital asset. It will be long-term capital gain or loss if the shares were
held for more than one year. However, any capital loss arising from the
redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of the amount of capital gain dividends
received on those shares. Special holding period rules under the Internal
Revenue Code apply in this case to determine the holding period of shares and
there are limits on the deductibility of capital losses in any year.

Foreign Shareholders. Under U.S. tax law, taxation of a shareholder who is a
foreign person (to include, but not limited to, a nonresident alien
individual, a foreign trust, a foreign estate, a foreign corporation, or a
foreign partnership) primarily depends on whether the foreign person's income
from the Fund is effectively connected with the conduct of a U.S. trade or
business. Typically, ordinary income dividends paid from a mutual fund are
not considered "effectively connected" income.

Ordinary income dividends that are paid by the Fund (and are deemed not
"effectively connected income") to foreign persons will be subject to a U.S.
tax withheld by the Fund at a rate of 30%, provided the Fund obtains a
properly completed and signed Certificate of Foreign Status. The tax rate may
be reduced if the foreign person's country of residence has a tax treaty with
the U.S. allowing for a reduced tax rate on ordinary income dividends paid by
the Fund. Any tax withheld by the Fund is remitted by the Fund to the U.S.
Treasury and all income and any tax withheld is identified in reports mailed
to shareholders in March of each year with a copy sent to the IRS.

If the ordinary income dividends from the Fund are effectively
connected with the conduct of a U.S. trade or business, then the foreign
person may claim an exemption from the U.S. tax described above provided the
Fund obtains a properly completed and signed Certificate of Foreign Status.
If the foreign person fails to provide a certification of his/her foreign
status, the Fund will be required to withhold U.S. tax at a rate of 28% on
ordinary income dividends, capital gains distributions and the proceeds of
the redemption of shares, paid to any foreign person. Any tax withheld by the
Fund is remitted by the Fund to the U.S. Treasury and all income and any tax
withheld is identified in reports mailed to shareholders in January of each
year with a copy sent to the IRS.

The tax consequences to foreign persons entitled to claim the benefits
of an applicable tax treaty may be different from those described herein.
Foreign shareholders are urged to consult their own tax advisors or the U.S.
Internal Revenue Service with respect to the particular tax consequences to
them of an investment in the Fund, including the applicability of the U.S.
withholding taxes described above.

Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the
same class of any of the other Oppenheimer funds into which you may exchange
shares. Reinvestment will be made without sales charge at the net asset value
per share in effect at the close of business on the payable date of the
dividend or distribution. However, such reinvestment will not be protected by
the Financial Warranty and will result in a reduction of the shareholder's
Warranty Amount. To elect this option, the shareholder must notify the
Transfer Agent in writing and must have an existing account in the fund
selected for reinvestment. Otherwise the shareholder first must obtain a
prospectus for that fund and an application from the Distributor to establish
an account.

Additional Information About the Fund

The Distributor. The Fund's shares were sold through dealers, brokers and
other financial institutions that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager that acts as
the Fund's Distributor. The Distributor also distributes shares of the other
Oppenheimer funds and is sub-distributor for funds managed by a subsidiary of
the Manager.

The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent, is
a division of the Manager. It is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for paying
dividends and distributions to shareholders. It also handles shareholder
servicing and administrative functions. It serves as the Transfer Agent for
an annual per account fee. It also acts as shareholder servicing agent for
the other Oppenheimer funds. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free numbers shown on
the back cover.

The Warranty Provider. Merrill Lynch Bank USA, located at 15 West South
Temple Square, Suite 300 Salt Lake City, Utah 84101, has entered into the
Warranty Agreement with the Fund. Merrill Lynch Bank USA is a wholly-owned
subsidiary of Merrill Lynch & Co., Inc. and its principal business is to
engage in banking activities. The audited financial statements of Merrill
Lynch Bank USA through the fiscal year ended December 30, 2005, and its
subsequent quarterly unaudited financial statements dated March 31, 2006,
June 30, 2006 and September 29, 2006, have been filed with Post-Effective
Amendment No. 7 to Oppenheimer Principal Protected Trust's Form N-1A
Registration Statement and are incorporated herein by reference. You may
request a copy of the Merrill Lynch Bank USA's financial statements, free of
charge, by calling the Transfer Agent at the toll-free number listed on the
back cover of this Statement of Additional Information.

The Custodian. JPMorgan Chase Bank is the custodian of the Fund's assets. The
custodian's responsibilities include safeguarding and controlling the Fund's
portfolio securities and handling the delivery of such securities to and from
the Fund. It is the practice of the Fund to deal with the custodian in a
manner uninfluenced by any banking relationship the custodian may have with
the Manager and its affiliates. The Fund's cash balances with the custodian
in excess of $100,000 are not protected by federal deposit insurance. Those
uninsured balances at times may be substantial.

Independent Registered Public Accounting Firm. Deloitte & Touche LLP serves
as the independent registered public accounting firm for the Fund. Deloitte &
Touche LLP audits the Fund's financial statements and performs other related
audit services. Deloitte & Touche LLP also acts as the independent registered
public accounting firm for certain other funds advised by the Manager and its
affiliates. Audit and non-audit services provided by Deloitte & Touche LLP to
the Fund must be pre-approved by the Audit Committee. Deloitte & Touche LLP
are the independent auditors of MLBUSA and is the independent registered
public accounting firm for MLBUSA.

Financial Statements. The audited financial statements for the Oppenheimer
Main Street Fund (the "Underlying Fund") are incorporated in this Statement
of Additional Information by reference to the August 31, 2006 annual report
to shareholders of the Underlying Fund. You may request a copy of that annual
report at no charge by calling the toll-free number listed on the back cover
of this Statement of Additional Information during normal business hours on
any business day.

The financial statements for the Fund's fiscal year ended August 31,
2006 follow.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER PRINCIPAL PROTECTED
MAIN STREET FUND II:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Principal Protected Main Street Fund II, a series of Oppenheimer
Principal Protected Trust II, including the statement of investments, as of
August 31, 2006, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit includes consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of August 31, 2006, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Principal Protected Main Street Fund II as of August 31, 2006, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for the periods presented, in conformity with accounting principles generally
accepted in the United States of America.

DELOITTE &amp; TOUCHE LLP

Denver, Colorado
October 16, 2006

STATEMENT OF INVESTMENTS August 31, 2006
--------------------------------------------------------------------------------

VALUE
SHARES SEE NOTE 1
--------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--62.3% 1
--------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y (Cost
$92,519,933) 2,719,923 $106,974,572

PRINCIPAL
AMOUNT
--------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--35.6%
--------------------------------------------------------------------------------
U.S. Treasury Bonds:
STRIPS, 3.84%, 5/15/11 2 $ 441,000 357,681
STRIPS, 4.33%, 2/15/11 2,3 74,465,000 60,727,027
------------
Total U.S. Government Obligations (Cost
$61,920,280) 61,084,708

--------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--2.6%
--------------------------------------------------------------------------------
Undivided interest of 0.51% in joint repurchase agreement (Principal
Amount/Value $886,796,000, with a maturity value of $886,924,585) with UBS
Warburg LLC, 5.22%, dated 8/31/06, to be repurchased at $4,547,659 on 9/1/06,
collateralized by Federal National Mortgage Assn., 5%-5.50%, 9/1/35-12/1/35,
with a value of
$906,809,462 (Cost $4,547,000) 4,547,000 4,547,000
--------------------------------------------------------------------------------
Total Investments, at Value (excluding Investments
Purchased with Cash Collateral from Securities
Loaned) (Cost $158,987,213) 172,606,280

--------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--11.9% 4
--------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--11.9%

Undivided interest of 0.14% in joint repurchase
agreement (Principal Amount/Value $3,200,000,000,
with a maturity value of $3,200,470,222) with
Nomura Securities, 5.29%, dated 8/31/06, to be
repurchased at $4,462,738 on 9/1/06, collateralized
by U.S. Agency Mortgages, 0.00%-22.12%,
3/15/14-6/25/43, with a value of $3,264,000,000 4,462,082 4,462,082
--------------------------------------------------------------------------------
Undivided interest of 0.40% in joint repurchase
agreement (Principal Amount/Value $1,000,000,000
with a maturity value of $1,000,147,222) with ING
Financial Markets LLC, 5.30%, dated 8/31/06, to be
repurchased at $4,000,589 on 9/1/06, collateralized
by U.S. Agency Mortgages, 4.50%-6.50%,
10/1/18-8/1/36, with a value of $1,020,000,530 4,000,000 4,000,000
--------------------------------------------------------------------------------
Undivided interest of 0.80% in joint repurchase agreement (Principal
Amount/Value $500,000,000, with a maturity value of $500,073,924) with Banc of
America Securities LLC, 5.3225%, dated 8/31/06, to be repurchased at $4,000,591
on 9/1/06, collateralized by U.S. Agency Mortgages, 3.319%-8.419%,
4/1/11-8/1/36, with a value of
$510,000,000 4,000,000 4,000,000
--------------------------------------------------------------------------------
Undivided interest of 1.33% in joint repurchase agreement (Principal
Amount/Value $300,000,000, with a maturity value of $300,044,167) with GX
Clarke, 5.30%, dated 8/31/06, to be repurchased at $4,000,589 on 9/1/06,
collateralized by U.S. Agency Mortgages, 0.00%-8.20%, 9/7/06-4/1/56, with
a value of $306,000,181 4,000,000 4,000,000

PRINCIPAL VALUE
AMOUNT SEE NOTE 1
--------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS Continued

Undivided interest of 4% in joint repurchase agreement (Principal Amount/ Value
$100,000,000, with a maturity value of $100,014,694) with Fimat USA, Inc.,
5.29%, dated 8/31/06, to be repurchased at $4,000,588 on 9/1/06, collateralized
by U.S. Agency Mortgages, 0.00%-7.50%, 2/22/07-2/15/36,
with a value of $102,000,032 $4,000,000 $ 4,000,000
-------------
Total Investments Purchased with Cash Collateral
from Securities Loaned
(Cost $20,462,082) 20,462,082
--------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $179,449,295) 112.4% 193,068,362
--------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (12.4) (21,320,958)
--------------------------
NET ASSETS 100.0% $171,747,404
==========================

FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Represents ownership of an affiliated fund, at or during the period ended.
Transactions during the period in which the issuer was an affiliate are as
follows:

SHARES GROSS GROSS SHARES
AUGUST 31, 2005 ADDITIONS REDUCTIONS AUGUST 31, 2006
------------------------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y 3,052,646 2,060,576 2,393,299 2,719,923

VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN
------------------------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y $106,974,572 $1,757,266 $427,196

2. Zero coupon bond reflects effective yield on the date of purchase.

3. Partial or fully-loaned security. See Note 5 of accompanying Notes.

4. The security/securities have been segregated to satisfy the forward
commitment to return the cash collateral received in securities lending
transactions upon the borrower's return of the securities loaned. See Note 5 of
accompanying Notes.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

STATEMENT OF ASSETS AND LIABILITIES August 31, 2006
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $86,929,362) $ 86,093,790
Affiliated companies (cost $92,519,933) 106,974,572
-------------
193,068,362
--------------------------------------------------------------------------------
Cash 50,136
--------------------------------------------------------------------------------
Receivables and other assets:
Interest 4,145
Other 7,366
-------------
Total assets 193,130,009

--------------------------------------------------------------------------------
LIABILITIES
--------------------------------------------------------------------------------
Return of collateral for securities loaned 20,462,082
--------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 620,565
Warranty agreement fees 174,245
Distribution and service plan fees 73,984
Shareholder communications 13,651
Transfer and shareholder servicing agent fees 13,510
Trustees' compensation 4,667
Other 19,901
-------------
Total liabilities 21,382,605
--------------------------------------------------------------------------------
NET ASSETS $171,747,404
=============

--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
--------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 5,600
--------------------------------------------------------------------------------
Additional paid-in capital 168,285,464
--------------------------------------------------------------------------------
Accumulated net investment loss (5,333)
--------------------------------------------------------------------------------
Accumulated net realized loss on investments (10,157,394)
--------------------------------------------------------------------------------
Net unrealized appreciation on investments 13,619,067
-------------
NET ASSETS $171,747,404
=============

--------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE

--------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$63,780,970 and 2,072,104 shares of beneficial
interest outstanding) $ 30.78
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price) $ 32.66
--------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per share
(based on net assets of $76,284,738 and 2,494,314 shares of
beneficial interest outstanding) $ 30.58
--------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per share
(based on net assets of $31,681,696 and 1,033,714 shares of
beneficial interest outstanding) $ 30.65

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

STATEMENT OF OPERATIONS For the Year Ended August 31, 2006
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
INVESTMENT INCOME
--------------------------------------------------------------------------------
Interest $ 3,298,869
--------------------------------------------------------------------------------
Dividends from affiliated companies 1,757,266
--------------------------------------------------------------------------------
Portfolio lending fees 9,809
--------------------------------------------------------------------------------
Other income 12
------------
Total investment income 5,065,956

--------------------------------------------------------------------------------
EXPENSES
--------------------------------------------------------------------------------
Management fees 988,803
--------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 181,212
Class B 849,160
Class C 397,611
--------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 49,513
Class B 84,682
Class C 30,769
--------------------------------------------------------------------------------
Shareholder communications:
Class A 14,879
Class B 21,131
Class C 7,371
--------------------------------------------------------------------------------
Warranty agreement fees 1,186,614
--------------------------------------------------------------------------------
Trustees' compensation 7,187
--------------------------------------------------------------------------------
Administration service fees 1,500
--------------------------------------------------------------------------------
Other 30,687
------------
Total expenses 3,851,119
Less waivers and reimbursements of expenses (578,364)
------------
Net expenses 3,272,755

--------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,793,201
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
--------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments:
Unaffiliated companies (2,387,847)
Affiliated companies 427,196
------------
Net realized loss (1,960,651)
--------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 5,627,943
--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,460,493
============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------

YEAR ENDED AUGUST 31, 2006 2005
--------------------------------------------------------------------------------------------------------------------

OPERATIONS
--------------------------------------------------------------------------------------------------------------------
Net investment income $ 1,793,201 $ 2,808,952
--------------------------------------------------------------------------------------------------------------------
Net realized loss (1,960,651) (3,870,946)
--------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 5,627,943 11,436,303
-----------------------------
Net increase in net assets resulting from operations 5,460,493 10,374,309

--------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
--------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (1,277,721) (1,815,002)
Class B (769,523) (1,122,277)
Class C (311,297) (764,510)
--------------------------------------------------------------------------------------------------------------------
Tax return of capital distribution from net investment income:
Class A (29,581) --
Class B (34,379) --
Class C (16,086) --

--------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
--------------------------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from beneficial interest transactions:
Class A (22,043,730) (18,797,558)
Class B (17,313,294) (10,909,692)
Class C (18,024,933) (21,686,755)

--------------------------------------------------------------------------------------------------------------------
NET ASSETS
--------------------------------------------------------------------------------------------------------------------
Total decrease (54,360,051) (44,721,485)
--------------------------------------------------------------------------------------------------------------------
Beginning of period 226,107,455 270,828,940
-----------------------------
End of period (including accumulated net investment income (loss)
of $(5,333) and $560,006, respectively) $171,747,404 $226,107,455
=============================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------

1. For the period from November 10, 2003 (commencement of operations) to August
31, 2004.

2. Per share amounts calculated based on the average shares outstanding during
the period.

4. Annualized for periods of less than one full year.

5. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 1.75%
Year Ended August 31, 2005 1.69%
Period Ended August 31, 2004 1.54%

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

1. For the period from November 10, 2003 (commencement of operations) to August
31, 2004.

2. Per share amounts calculated based on the average shares outstanding during
the period.

4. Annualized for periods of less than one full year.

5. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 2.54%
Year Ended August 31, 2005 2.49%
Period Ended August 31, 2004 2.32%

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

FINANCIAL HIGHLIGHTS Continued
--------------------------------------------------------------------------------

1. For the period from November 10, 2003 (commencement of operations) to August
31, 2004.

2. Per share amounts calculated based on the average shares outstanding during
the period.

4. Annualized for periods of less than one full year.

5. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 2.51%
Year Ended August 31, 2005 2.46%
Period Ended August 31, 2004 2.28%

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

NOTES TO FINANCIALSTATEMENTS
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
1.SIGNIFICANT ACCOUNTING POLICIES

Oppenheimer Principal Protected Main Street Fund II(R) (the Fund), a series of
Oppenheimer Principal Protected Trust II, is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
During the Warranty Period, the Fund will seek capital preservation in order to
have a net asset value on the Maturity Date at least equal to the Warranty
Amount. The Fund seeks high total return as a secondary objective. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager).

Shares of the Fund were offered during the Offering Period (November 10,
2003 to February 27, 2004). Shares are not offered during the Warranty Period
(March 3, 2004 to March 3, 2011) to the Maturity Date (March 3, 2011) except in
connection with reinvestment of dividends and distributions. During the Warranty
Period, the Fund will allocate its assets between Oppenheimer Main Street
Fund(R) (the Underlying Fund) and certain U.S. government securities.

The Fund offered Class A, Class B and Class C shares. Class A shares were
sold at their offering price, which is normally net asset value plus a front-end
sales charge. Class B and Class C shares were sold without a front-end sales
charge but may be subject to a contingent deferred sales charge (CDSC). All
classes of shares have identical rights and voting privileges with respect to
the Fund in general and exclusive voting rights on matters that affect that
class alone. Earnings, net assets and net asset value per share may differ due
to each class having its own expenses, such as transfer and shareholder
servicing agent fees and shareholder communications, directly attributable to
that class. Class A, B and C have separate distribution and/or service plans.
Class B shares will automatically convert to Class A shares 88 months after the
date of purchase.

The following is a summary of significant accounting policies consistently
followed by the Fund.

--------------------------------------------------------------------------------
WARRANTY AGREEMENT. The Fund has entered into a Financial Warranty Agreement
with Merrill Lynch Bank USA ("the Warranty Provider") to ensure that on the
Maturity Date each shareholder's account will be no less than the value of that
shareholder's account on the second business day after the end of the Offering
Period (the Warranty Amount). This value will include net income, if any, earned
by the Fund during the offering period and be reduced by adjustments permitted
under the Warranty Agreement, sales charges, applicable share of extraordinary
expenses and proportionately reduced for dividends and distributions paid in
cash and redemptions of Fund shares. To avoid a reduced Warranty Amount,
shareholders must reinvest all dividends and distributions received from the
Fund to purchase additional shares of the Fund and must not redeem any shares of
the Fund during the Warranty Period. If the value of the Fund's assets on the
Maturity Date is insufficient to result in the value of each shareholder's
account being at least equal to the shareholder's Warranty Amount, the Warranty
Provider will pay the Fund an amount equal to the excess of his or her Warranty
Amount over his or her account value.

The Financial Warranty is solely the obligation of the Warranty Provider.
It is possible that the financial position of the Warranty Provider may
deteriorate and it would be

NOTES TO FINANCIAL STATEMENTS Continued
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES Continued

unable to satisfy its obligations under the Financial Warranty. The Fund's
assets and the obligations of the Warranty Provider under the Warranty Agreement
are not guaranteed by Merrill Lynch &amp; Co., Inc. (the Warranty Provider's parent
company), the United States Government, the Manager, or any other entity or
person.

The Warranty Agreement requires the Manager, on behalf of the Fund, to
comply with certain agreed upon investment parameters in an attempt to limit the
Fund's risk. If the Manager fails to comply with the agreed-upon investment
parameters or otherwise fails to comply with certain requirements set forth in
the Warranty Agreement, the Warranty Provider may terminate its Financial
Warranty in certain limited circumstances. The Warranty Provider may monitor the
Fund's compliance with the Warranty Agreement solely to protect the interests of
the Warranty Provider and not the Fund's shareholders.

The fee paid to the Warranty Provider is an annual fee of 0.60% of the
average daily net assets of the Fund. If the Fund is required to make a complete
and irreversible allocation of its assets to the debt portfolio, the Warranty
Fee will thereafter be reduced to 0.35% of the average daily net assets of the
Fund.

--------------------------------------------------------------------------------
SECURITIES VALUATION. The allocation of the Fund's assets between the debt
portfolio and the equity portfolio will vary over time based upon the Warranty
Formula. The formula is intended to allow the Fund to have a net asset value on
the Maturity Date at least equal to the Warranty Amount.

During the Warranty Period, the Fund will invest a portion of its assets,
and in certain circumstances, the Fund may invest all of its assets, in U.S.
government securities having maturities approximately equal to the period
remaining in the Warranty Period. Long term debt securities having a remaining
maturity in excess of sixty days will be valued at the mean between the "bid"
and "asked" prices. Long-term and short-term "non-money market" debt securities
are valued by a portfolio pricing service approved by the Board of Trustees.
Short-term "money market type" debt securities with remaining maturities of
sixty days or less are valued at amortized cost (which approximates market
value).

The Fund invests the equity portfolio in Class Y shares of Oppenheimer Main
Street Fund (the Underlying Fund). The net asset value of the Underlying Fund is
determined as of the close of the New York Stock Exchange (the "Exchange"),
normally 4:00 P.M. Eastern time, on each day the Exchange is open for business.
The net asset value per share is determined by dividing the value of the Fund's
net assets attributable to a class by the number of shares of that class that
are outstanding.

--------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.

--------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.

--------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.

The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.

NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD (1,2,3,4) TAX PURPOSES
-----------------------------------------------------------------------------
$-- $-- $7,476,94 $10,938,621

1. As of August 31, 2006, the Fund had $5,860,101 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of August 31, 2006, details
of the capital loss carryforwards were as follows:

EXPIRING
---------------------
2013 $3,362,507
2014 2,497,594
----------
Total $5,860,101
==========

2. As of August 31, 2006, the Fund had $1,616,847 of post-October losses
available to offset future realized capital gains, if any. Such losses, if
unutilized, will expire in 2015.

3. During the fiscal year ended August 31, 2006, the Fund did not utilize any
capital loss carryforward.

4. During the fiscal year ended August 31, 2005, the Fund did not utilize any
capital loss carryforward.

Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for August 31, 2006. Net assets of the
Fund were unaffected by the reclassifications.

NOTES TO FINANCIAL STATEMENTS Continued
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
1.SIGNIFICANT ACCOUNTING POLICIES Continued

REDUCTION TO REDUCTION TO ACCUMULATED
PAID-IN CAPITAL NET INVESTMENT LOSS
------------------------------------------
$80,047 $80,047

The tax character of distributions paid during the years ended August 31, 2006
and August 31, 2005 was as follows:

YEAR ENDED YEAR ENDED
AUGUST 31, 2006 AUGUST 31, 2005
---------------------------------
Distributions paid from:
Ordinary income $2,358,541 $3,701,789
Return of capital 80,046 --
----------------------------
Total $2,438,587 $3,701,789
============================

The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of August 31, 2006 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities $182,129,741
=============
Gross unrealized appreciation $ 12,467,293
Gross unrealized depreciation (1,528,672)
-------------
Net unrealized appreciation $ 10,938,621
=============

--------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred
compensation plan for independent trustees that enables trustees to elect to
defer receipt of all or a portion of the annual compensation they are entitled
to receive from the Fund. For purposes of determining the amount owed to the
Trustee under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or in other Oppenheimer funds
selected by the Trustee. The Fund purchases shares of the funds selected for
deferral by the Trustee in amounts equal to his or her deemed investment,
resulting in a Fund asset equal to the deferred compensation liability. Such
assets are included as a component of "Other" within the asset section of the
Statement of Assets and Liabilities. Deferral of trustees' fees under the plan
will not affect the net assets of the Fund, and will not materially affect the
Fund's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.

--------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.

--------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.

--------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts, to the extent they are not
offset by positive cash balances maintained by the Fund, at a rate equal to the
Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line item,
if applicable, represents earnings on cash balances maintained by the Fund
during the period. Such interest expense and other custodian fees may be paid
with these earnings.

--------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.

--------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.

--------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.

--------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST

The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:

NOTES TO FINANCIAL STATEMENTS Continued
--------------------------------------------------------------------------------

YEAR ENDED AUGUST 31, 2006 YEAR ENDED AUGUST 31, 2005
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------

CLASS A
Sold 8,919 $ 272,394 1 -- $ --
Dividends and/or
distributions reinvested 41,557 1,253,493 57,560 1,723,924
Redeemed (772,982) (23,569,617) (686,942) (20,521,482)
-------------------------------------------------------
Net decrease (722,506) $(22,043,730) (629,382) $(18,797,558)
=======================================================

----------------------------------------------------------------------------------
CLASS B
Dividends and/or
distributions reinvested 25,425 $ 765,654 33,935 $ 1,014,989
Redeemed (596,428) (18,078,948) (401,297) (11,924,681)
-------------------------------------------------------
Net decrease (571,003) $(17,313,294) (367,362) $(10,909,692)
=======================================================

----------------------------------------------------------------------------------
CLASS C
Dividends and/or
distributions reinvested 10,414 $ 315,501 17,316 $ 518,086
Redeemed (605,308) (18,340,434) (747,780) (22,204,841)
-------------------------------------------------------
Net decrease (594,894) $(18,024,933) (730,464) $(21,686,755)
=======================================================

1. Result of a broker correction to a shareholder transaction.

--------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES

The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended August 31, 2006, were as
follows:

PURCHASES SALES
-----------------------------------------------------------
Investment securities $78,886,983 $ 90,366,276
U.S. government and government
agency obligations 65,763,826 117,777,013

--------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES

MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of 0.50% of the average annual net assets of the Fund. That fee will
apply during the Warranty Period and the Post-Warranty Period. The management
fee shall be reduced to 0.40% per annum of average annual net assets of the Fund
in any month during the Warranty Period following a month where the Fund's
investment in equity securities (including shares of the Underlying Fund) is, on
average, less than 10% of net assets. If during the Warranty Period 100% of the
Fund's assets are completely and irreversibly invested in the debt portfolio,
the management fee will be at an annual rate of 0.25% of the average annual net
assets of the Fund, and if that occurs the Manager will further reduce its
management fee to the extent necessary so that expenses after waivers and
reductions to the Fund (other than Extraordinary Expenses such as litigation
costs) do not exceed 1.30% for Class A shares, 2.05% for Class B shares, 2.05%
for Class C shares. However, if this reduction in the management fee is not
sufficient to reduce expenses after waivers and reductions to these limits,
the Manager is not required to subsidize Fund expenses to assure that expenses
do not exceed those limits. Furthermore, if expenses exceed these expense
limits, the Warranty Amount will be reduced by any expenses that exceed those
limits.

--------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year
for preparing and filing the Fund's tax returns.

--------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended August 31, 2006, the Fund paid
$167,871 to OFS for services to the Fund.

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.

--------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
periodically at an annual rate of up to 0.25% of the average annual net assets
of Class A shares of the Fund. The Distributor currently uses all of those fees
to pay dealers, brokers, banks and other financial institutions periodically for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
periods. Fees incurred by the Fund under the Plan are detailed in the Statement
of Operations.

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES. The Fund has
adopted Distribution and Service Plans for Class B and Class C shares to
compensate the Distributor for its services in connection with the distribution
of those shares and servicing accounts. Under the plans, the Fund pays the
Distributor an annual asset-based sales charge of 0.75% on Class B and Class C
shares. The Distributor also receives a service fee of 0.25% under each plan. If
either the Class B or Class C plan is terminated by the Fund or by the
shareholders of a class, the Board of Trustees and its independent trustees must
determine whether the Distributor shall be entitled to payment from the Fund of
all or a portion of the service fee and/or asset-based sales charge in respect
to shares sold prior to the effective date of such termination. The
Distributor's aggregate uncompensated expenses under the plan at August 31, 2006
for Class B and Class C shares were $3,078,451 and $747,051, respectively. Fees
incurred by the Fund under the plans are detailed in the Statement of
Operations.

NOTES TO FINANCIAL STATEMENTS Continued
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued

SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the following table for the period
indicated.

CLASS A CLASS B CLASS C
CLASS A CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
-------------------------------------------------------------------------------
August 31, 2006 $-- $22,684 $335,581 $--
-------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager will reimburse the Fund for
expenses equal to the Underlying Fund expenses paid by the Fund as a shareholder
of the Underlying Fund. That expense reimbursement will fluctuate as the Fund's
allocation between the Underlying Fund and the debt portfolio changes. During
the year ended August 31, 2006, the Manager reimbursed the Fund $578,364 for
such Underlying Fund expenses.

OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class. This
undertaking may be amended or withdrawn at any time.

--------------------------------------------------------------------------------
5. SECURITIES LENDING

The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of
securities, letters of credit or cash, against the loaned securities and
maintains collateral in an amount not less than 100% of the market value of the
loaned securities during the period of the loan. The market value of the loaned
securities is determined at the close of business each day. If the Fund is
undercollateralized at the close of business due to an increase in market value
of securities on loan, additional collateral is requested from the borrowing
counterparty and is delivered to the Fund on the next business day. Cash
collateral may be invested in approved investments and the Fund bears the risk
of any loss in value of these investments. The Fund retains a portion of the
interest earned from the collateral. If the borrower defaults on its obligation
to return the securities loaned because of insolvency or other reasons, the Fund
could experience delays and cost in recovering the securities loaned or in
gaining access to the collateral. The Fund continues to receive the economic
benefit of interest or dividends paid on the securities loaned in the form of a
substitute payment received from the borrower. As of August 31, 2006, the Fund
had on loan securities valued at $42,365,496, which are included in the
Statement of Assets and Liabilities as "Investments, at value" and, when
applicable, as "Investments sold." Collateral of $42,947,341 was received for
the loans, of which $20,462,082 was received in cash and subsequently invested
in approved investments or held as cash.

--------------------------------------------------------------------------------
6. RECENT ACCOUNTING PRONOUNCEMENT

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
August 31, 2006, the Manager is evaluating the implications of FIN 48. Its
impact in the Fund's financial statements has not yet been determined.

--------------------------------------------------------------------------------
7. LITIGATION

A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds excluding the Fund) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses.

In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, as nominal defendants, and against certain present and former
Directors, Trustees and Officers of the funds, and the Distributor, as
defendants, were dismissed with prejudice, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.

The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.

Appendix A

Industry Classifications

Aerospace & Defense Household Products
Air Freight & Couriers Industrial Conglomerates
Airlines Insurance
Auto Components Internet & Catalog Retail
Automobiles Internet Software & Services
Beverages IT Services
Biotechnology Leisure Equipment & Products
Building Products Machinery
Chemicals Marine
Consumer Finance Media
Commercial Banks Metals & Mining
Commercial Services & Supplies Multiline Retail
Communications Equipment Multi-Utilities
Computers & Peripherals Office Electronics
Construction & Engineering Oil & Gas
Construction Materials Paper & Forest Products
Containers & Packaging Personal Products
Distributors Pharmaceuticals
Diversified Financial Services Real Estate
Diversified Telecommunication Road & Rail
Services
Electric Utilities Semiconductors and Semiconductor
Equipment
Electrical Equipment Software
Electronic Equipment & Instruments Specialty Retail
Energy Equipment & Services Textiles, Apparel & Luxury Goods
Food & Staples Retailing Thrifts & Mortgage Finance
Food Products Tobacco
Gas Utilities Trading Companies & Distributors
Health Care Equipment & Supplies Transportation Infrastructure
Health Care Providers & Services Water Utilities
Hotels Restaurants & Leisure Wireless Telecommunication Services
Household Durables

Appendix B

OppenheimerFunds Special Sales Charge Arrangements and Waivers

Shares of the Fund were sold during the Offering Period and cannot be
purchased during the Warranty Period.

In certain cases, the initial sales charge that applies to purchases of Class
A shares(1) of the Oppenheimer funds or the contingent deferred sales charge
that may apply to Class A, Class B or Class C shares may be waived.(2) That
is because of the economies of sales efforts realized by OppenheimerFunds
Distributor, Inc., (referred to in this document as the "Distributor"), or by
dealers or other financial institutions that offer those shares to certain
classes of investors. Not all waivers apply to all funds.

For the purposes of some of the waivers described below and in the Prospectus
and Statement of Additional Information of the applicable Oppenheimer funds,
the term "Retirement Plan" refers to the following types of plans:
1) plans created or qualified under Sections 401(a) or 401(k) of the
Internal Revenue Code,
2) non-qualified deferred compensation plans,
3) employee benefit plans(3)
4) Group Retirement Plans(4)
5) 403(b)(7) custodial plan accounts
6) Individual Retirement Accounts ("IRAs"), including traditional
IRAs, Roth IRAs, SEP-IRAs, SARSEPs or SIMPLE plans

The interpretation of these provisions as to the applicability of a special
arrangement or waiver in a particular case is in the sole discretion of the
Distributor or the transfer agent (referred to in this document as the
"Transfer Agent") of the particular Oppenheimer fund. These waivers and
special arrangements may be amended or terminated at any time by a particular
fund, the Distributor, and/or OppenheimerFunds, Inc. (referred to in this
document as the "Manager").

Waivers that apply at the time shares are redeemed must be requested by the
shareholder and/or dealer in the redemption request.
I. Applicability of Class A Contingent Deferred Sales Charges in Certain
Cases
------------------------------------------------------------------------------

Purchases of Class A Shares of Oppenheimer Funds That Are Not Subject to
Initial Sales Charge but May Be Subject to the Class A Contingent Deferred
Sales Charge (unless a waiver applies).

There is no initial sales charge on purchases of Class A shares of any
of the Oppenheimer funds in the cases listed below. However, these purchases
may be subject to the Class A contingent deferred sales charge if redeemed
within 18 months (24 months in the case of Oppenheimer Rochester National
Municipals and Rochester Fund Municipals) of the beginning of the calendar
month of their purchase, as described in the Prospectus (unless a waiver
described elsewhere in this Appendix applies to the redemption).
Additionally, on shares purchased under these waivers that are subject to the
Class A contingent deferred sales charge, the Distributor will pay the
applicable concession described in the Prospectus under "Class A Contingent
Deferred Sales Charge."(5) This waiver provision applies to:
|_| Purchases of Class A shares aggregating $1 million or more.
|_| Purchases of Class A shares by a Retirement Plan that was permitted to
purchase such shares at net asset value but subject to a contingent
deferred sales charge prior to March 1, 2001. That included plans
(other than IRA or 403(b)(7) Custodial Plans) that: 1) bought shares
costing $500,000 or more, 2) had at the time of purchase 100 or more
eligible employees or total plan assets of $500,000 or more, or 3)
certified to the Distributor that it projects to have annual plan
purchases of $200,000 or more.
|_| Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the
purchases are made:
1) through a broker, dealer, bank or registered investment adviser
that has made special arrangements with the Distributor for those
purchases, or
2) by a direct rollover of a distribution from a qualified
Retirement Plan if the administrator of that Plan has made
special arrangements with the Distributor for those purchases.
|_| Purchases of Class A shares by Retirement Plans that have any of the
following record-keeping arrangements:
1) The record keeping is performed by Merrill Lynch Pierce Fenner &
Smith, Inc. ("Merrill Lynch") on a daily valuation basis for the
Retirement Plan. On the date the plan sponsor signs the
record-keeping service agreement with Merrill Lynch, the Plan
must have $3 million or more of its assets invested in (a) mutual
funds, other than those advised or managed by Merrill Lynch
Investment Management, L.P. ("MLIM"), that are made available
under a Service Agreement between Merrill Lynch and the mutual
fund's principal underwriter or distributor, and (b) funds
advised or managed by MLIM (the funds described in (a) and (b)
are referred to as "Applicable Investments").
2) The record keeping for the Retirement Plan is performed on a
daily valuation basis by a record keeper whose services are
provided under a contract or arrangement between the Retirement
Plan and Merrill Lynch. On the date the plan sponsor signs the
record keeping service agreement with Merrill Lynch, the Plan
must have $5 million or more of its assets (excluding assets
invested in money market funds) invested in Applicable
Investments.
3) The record keeping for a Retirement Plan is handled under a
service agreement with Merrill Lynch and on the date the plan
sponsor signs that agreement, the Plan has 500 or more eligible
employees (as determined by the Merrill Lynch plan conversion
manager).
II. Waivers of Class A Sales Charges of Oppenheimer Funds
------------------------------------------------------------------------------

A. Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers.

Class A shares purchased by the following investors are not subject to any
Class A sales charges (and no concessions are paid by the Distributor on such
purchases):
|_| The Manager or its affiliates.
|_| Present or former officers, directors, trustees and employees (and
their "immediate families") of the Fund, the Manager and its
affiliates, and retirement plans established by them for their
employees. The term "immediate family" refers to one's spouse,
children, grandchildren, grandparents, parents, parents-in-law,
brothers and sisters, sons- and daughters-in-law, a sibling's
spouse, a spouse's siblings, aunts, uncles, nieces and nephews;
relatives by virtue of a remarriage (step-children, step-parents,
etc.) are included.
|_| Registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the
Distributor for that purpose.
|_| Dealers or brokers that have a sales agreement with the Distributor, if
they purchase shares for their own accounts or for retirement plans
for their employees.
|_| Employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and
which are identified as such to the Distributor) or with the
Distributor. The purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children).
|_| Dealers, brokers, banks or registered investment advisors that have
entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients. Those clients
may be charged a transaction fee by their dealer, broker, bank or
advisor for the purchase or sale of Fund shares.
|_| Investment advisors and financial planners who have entered into an
agreement for this purpose with the Distributor and who charge an
advisory, consulting or other fee for their services and buy shares
for their own accounts or the accounts of their clients.
|_| "Rabbi trusts" that buy shares for their own accounts, if the purchases
are made through a broker or agent or other financial intermediary
that has made special arrangements with the Distributor for those
purchases.
|_| Clients of investment advisors or financial planners (that have entered
into an agreement for this purpose with the Distributor) who buy
shares for their own accounts may also purchase shares without sales
charge but only if their accounts are linked to a master account of
their investment advisor or financial planner on the books and
records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements . Each of these
investors may be charged a fee by the broker, agent or financial
intermediary for purchasing shares.
|_| Directors, trustees, officers or full-time employees of OpCap Advisors
or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for
those persons.
|_| Accounts for which Oppenheimer Capital (or its successor) is the
investment advisor (the Distributor must be advised of this
arrangement) and persons who are directors or trustees of the
company or trust which is the beneficial owner of such accounts.
|_| A unit investment trust that has entered into an appropriate agreement
with the Distributor.
|_| Dealers, brokers, banks, or registered investment advisers that have
entered into an agreement with the Distributor to sell shares to
defined contribution employee retirement plans for which the dealer,
broker or investment adviser provides administration services.
|_| Retirement Plans and deferred compensation plans and trusts used to
fund those plans (including, for example, plans qualified or created
under sections 401(a), 401(k), 403(b) or 457 of the Internal Revenue
Code), in each case if those purchases are made through a broker,
agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases.
|_| A TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for
Value Fund were exchanged for Class A shares of that Fund due to the
termination of the Class B and Class C TRAC-2000 program on November
24, 1995.
|_| A qualified Retirement Plan that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for
Value Funds at net asset value, with such shares to be held through
DCXchange, a sub-transfer agency mutual fund clearinghouse, if that
arrangement was consummated and share purchases commenced by
December 31, 1996.
|_| Effective October 1, 2005, taxable accounts established with the
proceeds of Required Minimum Distributions from Retirement Plans.

B. Waivers of the Class A Initial and Contingent Deferred Sales Charges in
Certain Transactions.

1. Class A shares issued or purchased in the following transactions are
not subject to sales charges (and no concessions are paid by the
Distributor on such purchases):
|_| Shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party.
|_| Shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds or
unit investment trusts for which reinvestment arrangements have been
made with the Distributor.
|_| Shares purchased by certain Retirement Plans that are part of a
retirement plan or platform offered by banks, broker-dealers,
financial advisors or insurance companies, or serviced by
recordkeepers.
|_| Shares purchased by the reinvestment of loan repayments by a
participant in a Retirement Plan for which the Manager or an
affiliate acts as sponsor.
|_| Shares purchased in amounts of less than $5.

2. Class A shares issued and purchased in the following transactions are
not subject to sales charges (a dealer concession at the annual rate of
0.25% is paid by the Distributor on purchases made within the first 6
months of plan establishment):
|_| Retirement Plans that have $5 million or more in plan assets.
|_| Retirement Plans with a single plan sponsor that have $5 million or
more in aggregate assets invested in Oppenheimer funds.

C. Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions.

The Class A contingent deferred sales charge is also waived if shares that
would otherwise be subject to the contingent deferred sales charge are
redeemed in the following cases:
|_| To make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the account value adjusted annually.
|_| Involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (please refer to "Shareholder Account
Rules and Policies," in the applicable fund Prospectus).
|_| For distributions from Retirement Plans, deferred compensation plans or
other employee benefit plans for any of the following purposes:
1) Following the death or disability (as defined in the Internal
Revenue Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was
established.
2) To return excess contributions.
3) To return contributions made due to a mistake of fact.
4) Hardship withdrawals, as defined in the plan.(6)
5) Under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code, or, in the case of an IRA, a divorce or
separation agreement described in Section 71(b) of the Internal
Revenue Code.
6) To meet the minimum distribution requirements of the Internal
Revenue Code.
7) To make "substantially equal periodic payments" as described in
Section 72(t) of the Internal Revenue Code.
8) For loans to participants or beneficiaries.
9) Separation from service.(7)
10) Participant-directed redemptions to purchase shares of a
mutual fund (other than a fund managed by the Manager or a
subsidiary of the Manager) if the plan has made special
arrangements with the Distributor.
11) Plan termination or "in-service distributions," if the
redemption proceeds are rolled over directly to an
OppenheimerFunds-sponsored IRA.
|_| For distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing
this waiver.
|_| For distributions from retirement plans that have $10 million or more
in plan assets and that have entered into a special agreement with
the Distributor.
|_| For distributions from retirement plans which are part of a retirement
plan product or platform offered by certain banks, broker-dealers,
financial advisors, insurance companies or record keepers which have
entered into a special agreement with the Distributor.
III. Waivers of Class B, Class C and Class N Sales Charges of Oppenheimer
Funds
------------------------------------------------------------------------------

The Class B, Class C and Class N contingent deferred sales charges will not
be applied to shares purchased in certain types of transactions or redeemed
in certain circumstances described below.

A. Waivers for Redemptions in Certain Cases.

The Class B, Class C and Class N contingent deferred sales charges will be
waived for redemptions of shares in the following cases:
|_| Shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," in the applicable Prospectus.
|_| Redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder. The death or
disability must have occurred after the account was established, and
for disability you must provide evidence of a determination of
disability by the Social Security Administration.
|_| The contingent deferred sales charges are generally not waived
following the death or disability of a grantor or trustee for a
trust account. The contingent deferred sales charges will only be
waived in the limited case of the death of the trustee of a grantor
trust or revocable living trust for which the trustee is also the
sole beneficiary. The death or disability must have occurred after
the account was established, and for disability you must provide
evidence of a determination of disability (as defined in the
Internal Revenue Code).
|_| Distributions from accounts for which the broker-dealer of record has
entered into a special agreement with the Distributor allowing this
waiver.
|_| Redemptions of Class B shares held by Retirement Plans whose records
are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch.
|_| Redemptions of Class C shares of Oppenheimer U.S. Government Trust from
accounts of clients of financial institutions that have entered into
a special arrangement with the Distributor for this purpose.
|_| Redemptions of Class C shares of an Oppenheimer fund in amounts of $1
million or more requested in writing by a Retirement Plan sponsor
and submitted more than 12 months after the Retirement Plan's first
purchase of Class C shares, if the redemption proceeds are invested
to purchase Class N shares of one or more Oppenheimer funds.
|_| Distributions(8) from Retirement Plans or other employee benefit plans
for any of the following purposes:
1) Following the death or disability (as defined in the Internal
Revenue Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was
established in an Oppenheimer fund.
2) To return excess contributions made to a participant's account.
3) To return contributions made due to a mistake of fact.
4) To make hardship withdrawals, as defined in the plan.(9)
5) To make distributions required under a Qualified Domestic
Relations Order or, in the case of an IRA, a divorce or
separation agreement described in Section 71(b) of the Internal
Revenue Code.
6) To meet the minimum distribution requirements of the Internal
Revenue Code.
7) To make "substantially equal periodic payments" as described in
Section 72(t) of the Internal Revenue Code.
8) For loans to participants or beneficiaries.(10)
9) On account of the participant's separation from service.(11)
10) Participant-directed redemptions to purchase shares of a
mutual fund (other than a fund managed by the Manager or a
subsidiary of the Manager) offered as an investment option in a
Retirement Plan if the plan has made special arrangements with
the Distributor.
11) Distributions made on account of a plan termination or
"in-service" distributions, if the redemption proceeds are rolled
over directly to an OppenheimerFunds-sponsored IRA.
12) For distributions from a participant's account under an
Automatic Withdrawal Plan after the participant reaches age 59 1/2,
as long as the aggregate value of the distributions does not
exceed 10% of the account's value, adjusted annually.
13) Redemptions of Class B shares under an Automatic Withdrawal
Plan for an account other than a Retirement Plan, if the
aggregate value of the redeemed shares does not exceed 10% of the
account's value, adjusted annually.
14) For distributions from 401(k) plans sponsored by
broker-dealers that have entered into a special arrangement with
the Distributor allowing this waiver.
|_| Redemptions of Class B shares or Class C shares under an Automatic
Withdrawal Plan from an account other than a Retirement Plan if the
aggregate value of the redeemed shares does not exceed 10% of the
account's value annually.

B. Waivers for Shares Sold or Issued in Certain Transactions.

The contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
|_| Shares sold to the Manager or its affiliates.
|_| Shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager
or the Distributor for that purpose.
|_| Shares issued in plans of reorganization to which the Fund is a party.
|_| Shares sold to present or former officers, directors, trustees or
employees (and their "immediate families" as defined above in
Section I.A.) of the Fund, the Manager and its affiliates and
retirement plans established by them for their employees.
IV. Special Sales Charge Arrangements for Shareholders of Certain
Oppenheimer Funds Who Were Shareholders of Former Quest for Value Funds
------------------------------------------------------------------------------

The initial and contingent deferred sales charge rates and waivers for Class
A, Class B and Class C shares described in the Prospectus or Statement of
Additional Information of the Oppenheimer funds are modified as described
below for certain persons who were shareholders of the former Quest for Value
Funds. To be eligible, those persons must have been shareholders on November
24, 1995, when OppenheimerFunds, Inc. became the investment advisor to those
former Quest for Value Funds. Those funds include:
Oppenheimer Quest Value Fund, Inc. Oppenheimer Small- & Mid- Cap
Value Fund
Oppenheimer Quest Balanced Fund Oppenheimer Quest
International Value Fund, Inc.
Oppenheimer Quest Opportunity Value Fund

These arrangements also apply to shareholders of the following funds
when they merged (were reorganized) into various Oppenheimer funds on
November 24, 1995:

Quest for Value U.S. Government Income Fund Quest for Value New York
Tax-Exempt Fund
Quest for Value Investment Quality Income Fund Quest for Value
National Tax-Exempt Fund
Quest for Value Global Income Fund Quest for Value California
Tax-Exempt Fund

All of the funds listed above are referred to in this Appendix as the
"Former Quest for Value Funds." The waivers of initial and contingent
deferred sales charges described in this Appendix apply to shares of an
Oppenheimer fund that are either:
|_| acquired by such shareholder pursuant to an exchange of shares of an
Oppenheimer fund that was one of the Former Quest for Value Funds,
or
|_| purchased by such shareholder by exchange of shares of another
Oppenheimer fund that were acquired pursuant to the merger of any of
the Former Quest for Value Funds into that other Oppenheimer fund on
November 24, 1995.

A. Reductions or Waivers of Class A Sales Charges.

|X| Reduced Class A Initial Sales Charge Rates for Certain Former Quest for
Value Funds Shareholders.

Purchases by Groups and Associations. The following table sets forth the
initial sales charge rates for Class A shares purchased by members of
"Associations" formed for any purpose other than the purchase of securities.
The rates in the table apply if that Association purchased shares of any of
the Former Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995.

--------------------------------------------------------------------------------
Initial Sales Initial Sales Charge Concession as
Number of Eligible Charge as a % of as a % of Net Amount % of Offering
Employees or Members Offering Price Invested Price
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
9 or Fewer 2.50% 2.56% 2.00%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
At least 10 but not 2.00% 2.04% 1.60%
more than 49
--------------------------------------------------------------------------------

------------------------------------------------------------------------------
For purchases by Associations having 50 or more eligible employees or
members, there is no initial sales charge on purchases of Class A shares, but
those shares are subject to the Class A contingent deferred sales charge
described in the applicable fund's Prospectus.

Purchases made under this arrangement qualify for the lower of either
the sales charge rate in the table based on the number of members of an
Association, or the sales charge rate that applies under the Right of
Accumulation described in the applicable fund's Prospectus and Statement of
Additional Information. Individuals who qualify under this arrangement for
reduced sales charge rates as members of Associations also may purchase
shares for their individual or custodial accounts at these reduced sales
charge rates, upon request to the Distributor.

|X| Waiver of Class A Sales Charges for Certain Shareholders. Class A
shares purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:
o Shareholders who were shareholders of the AMA Family of Funds on
February 28, 1991 and who acquired shares of any of the Former
Quest for Value Funds by merger of a portfolio of the AMA Family
of Funds.
o Shareholders who acquired shares of any Former Quest for Value Fund by
merger of any of the portfolios of the Unified Funds.

|X| Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions. The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares purchased by the following investors who were
shareholders of any Former Quest for Value Fund:

Investors who purchased Class A shares from a dealer that is or was not
permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship, under the Employee
Retirement Income Security Act of 1974 and regulations adopted under that law.

B. Class A, Class B and Class C Contingent Deferred Sales Charge Waivers.

|X| Waivers for Redemptions of Shares Purchased Prior to March 6, 1995. In
the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, Class B or Class C shares of an Oppenheimer fund. The
shares must have been acquired by the merger of a Former Quest for Value Fund
into the fund or by exchange from an Oppenheimer fund that was a Former Quest
for Value Fund or into which such fund merged. Those shares must have been
purchased prior to March 6, 1995 in connection with:
o withdrawals under an automatic withdrawal plan holding only either
Class B or Class C shares if the annual withdrawal does not
exceed 10% of the initial value of the account value, adjusted
annually, and
o liquidation of a shareholder's account if the aggregate net asset value
of shares held in the account is less than the required minimum
value of such accounts.

|X| Waivers for Redemptions of Shares Purchased on or After March 6, 1995
but Prior to November 24, 1995. In the following cases, the contingent
deferred sales charge will be waived for redemptions of Class A, Class B or
Class C shares of an Oppenheimer fund. The shares must have been acquired by
the merger of a Former Quest for Value Fund into the fund or by exchange from
an Oppenheimer fund that was a Former Quest For Value Fund or into which such
Former Quest for Value Fund merged. Those shares must have been purchased on
or after March 6, 1995, but prior to November 24, 1995:
o redemptions following the death or disability of the shareholder(s) (as
evidenced by a determination of total disability by the U.S.
Social Security Administration);
o withdrawals under an automatic withdrawal plan (but only for Class B or
Class C shares) where the annual withdrawals do not exceed 10% of
the initial value of the account value; adjusted annually, and
o liquidation of a shareholder's account if the aggregate net asset value
of shares held in the account is less than the required minimum
account value.

A shareholder's account will be credited with the amount of any
contingent deferred sales charge paid on the redemption of any Class A, Class
B or Class C shares of the Oppenheimer fund described in this section if the
proceeds are invested in the same Class of shares in that fund or another
Oppenheimer fund within 90 days after redemption.
V. Special Sales Charge Arrangements for Shareholders of Certain
Oppenheimer Funds Who Were Shareholders of Connecticut Mutual
Investment Accounts, Inc.
------------------------------------------------------------------------------

The initial and contingent deferred sale charge rates and waivers for Class A
and Class B shares described in the respective Prospectus (or this Appendix)
of the following Oppenheimer funds (each is referred to as a "Fund" in this
section):
Oppenheimer U. S. Government Trust,
Oppenheimer Core Bond Fund,
Oppenheimer Value Fund and
Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were
shareholders of the following funds (referred to as the "Former Connecticut
Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the
investment adviser to the Former Connecticut Mutual Funds:
Connecticut Mutual Liquid Account Connecticut Mutual Total Return
Account
Connecticut Mutual Government Securities Account CMIA LifeSpan Capital
Appreciation Account
Connecticut Mutual Income Account CMIA LifeSpan Balanced Account
Connecticut Mutual Growth Account CMIA Diversified Income Account

A. Prior Class A CDSC and Class A Sales Charge Waivers.

|X| Class A Contingent Deferred Sales Charge. Certain shareholders of a
Fund and the other Former Connecticut Mutual Funds are entitled to continue
to make additional purchases of Class A shares at net asset value without a
Class A initial sales charge, but subject to the Class A contingent deferred
sales charge that was in effect prior to March 18, 1996 (the "prior Class A
CDSC"). Under the prior Class A CDSC, if any of those shares are redeemed
within one year of purchase, they will be assessed a 1% contingent deferred
sales charge on an amount equal to the current market value or the original
purchase price of the shares sold, whichever is smaller (in such redemptions,
any shares not subject to the prior Class A CDSC will be redeemed first).

Those shareholders who are eligible for the prior Class A CDSC are:
1) persons whose purchases of Class A shares of a Fund and other
Former Connecticut Mutual Funds were $500,000 prior to March 18,
1996, as a result of direct purchases or purchases pursuant to
the Fund's policies on Combined Purchases or Rights of
Accumulation, who still hold those shares in that Fund or other
Former Connecticut Mutual Funds, and
2) persons whose intended purchases under a Statement of Intention
entered into prior to March 18, 1996, with the former general
distributor of the Former Connecticut Mutual Funds to purchase
shares valued at $500,000 or more over a 13-month period entitled
those persons to purchase shares at net asset value without being
subject to the Class A initial sales charge

Any of the Class A shares of a Fund and the other Former Connecticut
Mutual Funds that were purchased at net asset value prior to March 18, 1996,
remain subject to the prior Class A CDSC, or if any additional shares are
purchased by those shareholders at net asset value pursuant to this
arrangement they will be subject to the prior Class A CDSC.

|X| Class A Sales Charge Waivers. Additional Class A shares of a Fund may
be purchased without a sales charge, by a person who was in one (or more) of
the categories below and acquired Class A shares prior to March 18, 1996, and
still holds Class A shares:
1) any purchaser, provided the total initial amount invested in the
Fund or any one or more of the Former Connecticut Mutual Funds
totaled $500,000 or more, including investments made pursuant to
the Combined Purchases, Statement of Intention and Rights of
Accumulation features available at the time of the initial
purchase and such investment is still held in one or more of the
Former Connecticut Mutual Funds or a Fund into which such Fund
merged;
2) any participant in a qualified plan, provided that the total
initial amount invested by the plan in the Fund or any one or
more of the Former Connecticut Mutual Funds totaled $500,000 or
more;
3) Directors of the Fund or any one or more of the Former
Connecticut Mutual Funds and members of their immediate families;
4) employee benefit plans sponsored by Connecticut Mutual Financial
Services, L.L.C. ("CMFS"), the prior distributor of the Former
Connecticut Mutual Funds, and its affiliated companies;
5) one or more members of a group of at least 1,000 persons (and
persons who are retirees from such group) engaged in a common
business, profession, civic or charitable endeavor or other
activity, and the spouses and minor dependent children of such
persons, pursuant to a marketing program between CMFS and such
group; and
6) an institution acting as a fiduciary on behalf of an individual
or individuals, if such institution was directly compensated by
the individual(s) for recommending the purchase of the shares of
the Fund or any one or more of the Former Connecticut Mutual
Funds, provided the institution had an agreement with CMFS.

Purchases of Class A shares made pursuant to (1) and (2) above may be
subject to the Class A CDSC of the Former Connecticut Mutual Funds described
above.

Additionally, Class A shares of a Fund may be purchased without a sales
charge by any holder of a variable annuity contract issued in New York State
by Connecticut Mutual Life Insurance Company through the Panorama Separate
Account which is beyond the applicable surrender charge period and which was
used to fund a qualified plan, if that holder exchanges the variable annuity
contract proceeds to buy Class A shares of the Fund.

B. Class A and Class B Contingent Deferred Sales Charge Waivers.

In addition to the waivers set forth in the Prospectus and in this Appendix,
above, the contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of a Fund and exchanges of Class A or Class B
shares of a Fund into Class A or Class B shares of a Former Connecticut
Mutual Fund provided that the Class A or Class B shares of the Fund to be
redeemed or exchanged were (i) acquired prior to March 18, 1996 or (ii) were
acquired by exchange from an Oppenheimer fund that was a Former Connecticut
Mutual Fund. Additionally, the shares of such Former Connecticut Mutual Fund
must have been purchased prior to March 18, 1996:
1) by the estate of a deceased shareholder;
2) upon the disability of a shareholder, as defined in Section 72(m)(7) of
the Internal Revenue Code;
3) for retirement distributions (or loans) to participants or
beneficiaries from retirement plans qualified under Sections 401(a) or
403(b)(7)of the Code, or from IRAs, deferred compensation plans created
under Section 457 of the Code, or other employee benefit plans;
4) as tax-free returns of excess contributions to such retirement or
employee benefit plans;
5) in whole or in part, in connection with shares sold to any state,
county, or city, or any instrumentality, department, authority, or
agency thereof, that is prohibited by applicable investment laws from
paying a sales charge or concession in connection with the purchase of
shares of any registered investment management company;
6) in connection with the redemption of shares of the Fund due to a
combination with another investment company by virtue of a merger,
acquisition or similar reorganization transaction;
7) in connection with the Fund's right to involuntarily redeem or
liquidate the Fund;
8) in connection with automatic redemptions of Class A shares and Class B
shares in certain retirement plan accounts pursuant to an Automatic
Withdrawal Plan but limited to no more than 12% of the original value
annually; or
9) as involuntary redemptions of shares by operation of law, or under
procedures set forth in the Fund's Articles of Incorporation, or as
adopted by the Board of Directors of the Fund.
VI. Special Reduced Sales Charge for Former Shareholders of Advance
America Funds, Inc.
------------------------------------------------------------------------------

Shareholders of Oppenheimer AMT-Free Municipals, Oppenheimer U.S. Government
Trust, Oppenheimer Strategic Income Fund and Oppenheimer Capital Income Fund
who acquired (and still hold) shares of those funds as a result of the
reorganization of series of Advance America Funds, Inc. into those
Oppenheimer funds on October 18, 1991, and who held shares of Advance America
Funds, Inc. on March 30, 1990, may purchase Class A shares of those four
Oppenheimer funds at a maximum sales charge rate of 4.50%.
VII. Sales Charge Waivers on Purchases of Class M Shares of Oppenheimer
Convertible Securities Fund
------------------------------------------------------------------------------

Oppenheimer Convertible Securities Fund (referred to as the "Fund" in this
section) may sell Class M shares at net asset value without any initial sales
charge to the classes of investors listed below who, prior to March 11, 1996,
owned shares of the Fund's then-existing Class A and were permitted to
purchase those shares at net asset value without sales charge:
|_| the Manager and its affiliates,
|_| present or former officers, directors, trustees and employees (and
their "immediate families" as defined in the Fund's Statement of
Additional Information) of the Fund, the Manager and its affiliates,
and retirement plans established by them or the prior investment
advisor of the Fund for their employees,
|_| registered management investment companies or separate accounts of
insurance companies that had an agreement with the Fund's prior
investment advisor or distributor for that purpose,
|_| dealers or brokers that have a sales agreement with the Distributor, if
they purchase shares for their own accounts or for retirement plans
for their employees,
|_| employees and registered representatives (and their spouses) of dealers
or brokers described in the preceding section or financial
institutions that have entered into sales arrangements with those
dealers or brokers (and whose identity is made known to the
Distributor) or with the Distributor, but only if the purchaser
certifies to the Distributor at the time of purchase that the
purchaser meets these qualifications,
|_| dealers, brokers, or registered investment advisors that had entered
into an agreement with the Distributor or the prior distributor of
the Fund specifically providing for the use of Class M shares of the
Fund in specific investment products made available to their
clients, and
|_| dealers, brokers or registered investment advisors that had entered
into an agreement with the Distributor or prior distributor of the
Fund's shares to sell shares to defined contribution employee
retirement plans for which the dealer, broker, or investment advisor
provides administrative services.

Appendix C

Information About the Underlying Fund

Additional Information About the Underlying Fund's Investment Policies and
Risks

The investment objective, the principal investment policies and the main
risks of the Oppenheimer Main Street Fund (the "Underlying Fund") are
described in the Underlying Fund's Prospectus as well as the Prospectus for
Oppenheimer Principal Protected Main Street Fund II. This Appendix C contains
supplemental information about those policies and risks and the types of
securities that the Underlying Fund's investment Manager, OppenheimerFunds,
Inc., can select for the Underlying Fund. Additional information is also
provided about the strategies that the Underlying Fund can use to try to
achieve its objective.

The Underlying Fund's Principal Investment Policies. The composition of the
Underlying Fund's portfolio and the techniques and strategies that the
Underlying Fund's Manager can use in selecting portfolio securities will vary
over time. The Underlying Fund is not required to use any of the investment
techniques and strategies described below at all times in seeking its goal.
It can use some of the special investment techniques and strategies at some
times or not at all.

|X| Investments in Equity Securities. The Underlying Fund does not
limit its investments in equity securities to issuers having a market
capitalization of a specified size or range, and therefore can invest in
securities of small-, mid- and large-capitalization issuers. At times, the
Underlying Fund can focus its equity investments in securities of one or more
capitalization ranges, based upon the Manager's judgment of where the best
market opportunities are to seek the Underlying Fund's objective. At times,
the market may favor or disfavor securities of issuers of a particular
capitalization range. Securities of small capitalization issuers may be
subject to greater price volatility in general than securities of larger
companies. Therefore, if the Underlying Fund is focusing on or has
substantial investments in smaller capitalization companies at times of
market volatility, the Underlying Fund's share prices may fluctuate more than
that of funds focusing on larger capitalization issuers.

|_| Rights and Warrants. The Underlying Fund can invest up to 10% of
its total assets in warrants or rights, although the Underlying Fund does not
currently intend to invest more than 5% of its total assets in warrants or
rights. Warrants basically are options to purchase equity securities at
specific prices valid for a specific period of time. Their prices do not
necessarily move parallel to the prices of the underlying securities. Rights
are similar to warrants, but normally have a short duration and are
distributed directly by the issuer to its shareholders. Rights and warrants
have no voting rights, receive no dividends and have no rights with respect
to the assets of the issuer.

|_| Convertible Securities. Convertible securities are debt
securities that are convertible into an issuer's common stock. Convertible
securities rank senior to common stock in a corporation's capital structure
and therefore are subject to less risk than common stock in case of the
issuer's bankruptcy or liquidation.

The value of a convertible security is a function of its "investment
value" and its "conversion value." If the investment value exceeds the
conversion value, the security will behave more like a debt security, and the
security's price will likely increase when interest rates fall and decrease
when interest rates rise. If the conversion value exceeds the investment
value, the security will behave more like an equity security. In that case,
it will likely sell at a premium over its conversion value, and its price
will tend to fluctuate directly with the price of the underlying security.

While some convertible securities are a form of debt security, in many
cases their conversion feature (allowing conversion into equity securities)
caused them to be regarded by the Manager more as "equity equivalents." As a
result, the rating assigned to the security has less impact on the Manager's
investment decision than in the case of non-convertible fixed-income
securities.

To determine whether convertible securities should be regarded as
"equity equivalents," the Manager examines the following factors:
o whether, at the option of the investor, the convertible security can be
exchanged for a fixed number of shares of common stock of the
issuer,
o whether the issuer of the convertible securities has restated its
earnings per share of common stock on a fully diluted basis
(considering the effect of conversion of the convertible
securities), and
o the extent to which the convertible security may be a defensive "equity
substitute," providing the ability to participate in any
appreciation in the price of the issuer's common stock.

|X| Investments in Bonds and Other Debt Securities. The Underlying Fund
can invest in bonds, debentures and other debt securities to seek its
investment objective. Because the Underlying Fund currently emphasizes
investments in equity securities, such as stocks, it is not anticipated that
significant amounts of the Underlying Fund's assets will be invested in debt
securities. However, if market conditions suggest that debt securities may
offer better total return opportunities than stocks, or if the Manager
determines to seek a higher amount of current income to distribute to
shareholders, the Manager can shift more of the Underlying Fund's investments
into debt securities.

The Underlying Fund's debt investments can include investment-grade and
non-investment-grade bonds (commonly referred to as "junk bonds").
Investment-grade bonds are bonds rated at least "Baa" by Moody's Investors
Service, Inc., or at least "BBB" by Standard & Poor's Corporation or Fitch,
Inc., or that have comparable ratings by another nationally-recognized rating
organization. In making investments in debt securities, the Manager can rely
to some extent on the ratings of ratings organizations or it can use its own
research to evaluate a security's credit-worthiness. If the securities that
the Underlying Fund buys are unrated, to be considered part of the Underlying
Fund's holdings of investment-grade securities, they must be judged by the
Manager to be of comparable quality to bonds rated as investment grade by a
rating organization.

|_| U.S. Government Securities. The Underlying Fund can buy securities
issued or guaranteed by the U.S. government or its agencies and
instrumentalities. Securities issued by the U.S. Treasury are backed by the
full faith and credit of the U.S. government and are subject to very little
credit risk. Obligations of U.S. government agencies or instrumentalities
(including mortgage-backed securities) may or may not be guaranteed or
supported by the "full faith and credit" of the United States. Some are
backed by the right of the issuer to borrow from the U.S. Treasury; others,
by discretionary authority of the U.S. government to purchase the agencies'
obligations; while others are supported only by the credit of the
instrumentality. If a security is not backed by the full faith and credit of
the United States, the owner of the security must look principally to the
agency issuing the obligation for repayment and may not be able to assert a
claim against the United States in the event that the agency or
instrumentality does not meet its commitment. The Underlying Fund will invest
in securities of U.S. government agencies and instrumentalities only when the
Manager is satisfied that the credit risk with respect to the agency or
instrumentality is minimal.

|_| Special Risks of Lower-Grade Securities. While it is not
anticipated that the Underlying Fund will invest a substantial portion of its
assets in debt securities, the Underlying Fund can do so to seek current
income. Because lower-rated securities tend to offer higher yields than
investment grade securities, the Underlying Fund can invest in lower grade
securities if the Manager is trying to achieve greater income (and, in some
cases, the appreciation possibilities of lower-grade securities may be a
reason they are selected for the Underlying Fund's portfolio).

The Underlying Fund can invest up to 25% of its total assets in "lower
grade" debt securities. However, the Underlying Fund does not currently
intend to invest more that 10% of its total assets in lower grade debt
securities. "Lower-grade" debt securities are those rated below "investment
grade" which means they have a rating lower than "Baa" by Moody's or lower
than "BBB" by Standard & Poor's or Fitch, Inc., or similar ratings by other
rating organizations. If they are unrated, and are determined by the Manager
to be of comparable quality to debt securities rated below investment grade,
they are included in the limitation on the percentage of the Underlying
Fund's assets that can be invested in lower-grade securities. The Underlying
Fund can invest in securities rated as low as "C" or "D" or which may be in
default at the time the Underlying Fund buys them.

Some of the special credit risks of lower-grade securities are
discussed in the Prospectus. There is a greater risk that the issuer may
default on its obligation to pay interest or to repay principal than in the
case of investment grade securities. The issuer's low creditworthiness may
increase the potential for its insolvency. An overall decline in values in
the high yield bond market is also more likely during a period of a general
economic downturn. An economic downturn or an increase in interest rates
could severely disrupt the market for high yield bonds, adversely affecting
the values of outstanding bonds as well as the ability of issuers to pay
interest or repay principal. In the case of foreign high yield bonds, these
risks are in addition to the special risk of foreign investing discussed in
the Prospectus and in this Statement of Additional Information.

However, the Underlying Fund's limitations on buying these investments
can reduce the effect of those risks to the Underlying Fund, as will the
Underlying Fund's policy of diversifying its investments. Additionally, to
the extent they can be converted into stock, convertible securities may be
less subject to some of these risks than non-convertible high yield bonds,
since stock may be more liquid and less affected by some of these risk
factors. The Underlying Fund may not invest more than 10% of its total assets
in lower-grade debt securities that are not convertible.

While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's
or Fitch, Inc. are investment grade and are not regarded as junk bonds, those
securities may be subject to special risks, and have some speculative
characteristics. Definitions of the debt security ratings categories of
Moody's, S&P, and Fitch, Inc. are included in Appendix A to this Statement of
Additional Information.

|X| Foreign Securities. The Underlying Fund can purchase equity and
debt securities issued or guaranteed by foreign companies or foreign
governments or their agencies. "Foreign securities" include equity and debt
securities of companies organized under the laws of countries other than the
United States and debt securities of foreign governments. They may be traded
on foreign securities exchanges or in the foreign over-the-counter markets.

Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Underlying Fund's investment allocations.
That is because they are not subject to many of the special considerations
and risks, discussed below, that apply to foreign securities traded and held
abroad.

Investing in foreign securities offers potential benefits not available
from investing solely in securities of domestic issuers. They include the
opportunity to invest in foreign issuers that appear to offer growth
potential, or in foreign countries with economic policies or business cycles
different from those of the U.S., or to reduce fluctuations in portfolio
value by taking advantage of foreign stock markets that do not move in a
manner parallel to U.S. markets. The Underlying Fund will hold foreign
currency only in connection with the purchase or sale of foreign securities.

|_| Risks of Foreign Investing. Investments in foreign securities
may offer special opportunities for investing but also present special
additional risks and considerations not typically associated with investments
in domestic securities. Some of these additional risks are:
o reduction of income by foreign taxes;
o fluctuation in value of foreign investments due to changes in currency
rates or currency control regulations (for example, currency
blockage);
o transaction charges for currency exchange;
o lack of public information about foreign issuers;
o lack of uniform accounting, auditing and financial reporting standards
in foreign countries comparable to those applicable to domestic
issuers;
o less volume on foreign exchanges than on U.S. exchanges;
o greater volatility and less liquidity on foreign markets than in the
U.S.;
o less governmental regulation of foreign issuers, stock exchanges and
brokers than in the U.S.;
o greater difficulties in commencing lawsuits;
o higher brokerage commission rates than in the U.S.;
o increased risks of delays in settlement of portfolio transactions or
loss of certificates for portfolio securities;
o possibilities in some countries of expropriation, confiscatory
taxation, political, financial or social instability or adverse
diplomatic developments; and
o unfavorable differences between the U.S. economy and foreign economies.

In the past, U.S. government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other restrictions,
and it is possible that such restrictions could be re-imposed.

|X| Passive Foreign Investment Companies. The Underlying Fund may
purchase the securities of certain foreign investment corporations called
passive foreign investment companies ("PFICs"). Such entities have been the
only or primary way to invest in certain countries because some foreign
countries limit, or prohibit, all direct foreign investment in the securities
of companies domiciled therein. However, the governments of some countries
have authorized the organization of investment funds to permit indirect
foreign investment in such securities. For tax purposes, these funds also may
be PFICs.

The Underlying Fund is subject to certain percentage limitations under
the Investment Company Act relating to the purchase of securities of
investment companies, and, consequently, the Underlying Fund may have to
subject any of its investment in other investment companies, including PFICs,
to the limitation that no more than 10% of the value of the Underlying Fund's
total assets may be invested in such securities. In addition to bearing their
proportionate share of a fund's expenses (management fees and operating
expenses), shareholders will also indirectly bear similar expenses of such
entities. Like other foreign securities, interests in PFICs also involve the
risk of foreign securities, as described above.

|X| Portfolio Turnover. "Portfolio turnover" describes the rate at
which the Underlying Fund traded its portfolio securities during its previous
fiscal year. For example, if a fund sold all of its securities during the
year, its portfolio turnover rate would have been 100%. The Underlying Fund's
portfolio turnover rate will fluctuate from year to year, and the Underlying
Fund can have a portfolio turnover rate of 100% or more. Increased portfolio
turnover creates higher brokerage and transaction costs for the Underlying
Fund, which may reduce its overall performance. Additionally, the realization
of capital gains from selling portfolio securities may result in
distributions of taxable long-term capital gains to shareholders, since the
Underlying Fund will normally distribute all of its capital gains realized
each year, to avoid excise taxes under the Internal Revenue Code. The
Financial Highlights table at the end of the Prospectus shows the Underlying
Fund's portfolio turnover rates during prior fiscal years.

Other Investment Techniques and Strategies. In seeking its objective, the
Underlying Fund can from time to time use the types of investment strategies
described below. It is not required to use all of these strategies at all
times and may, at times, not use any of them.

|X| Investing in Small, Unseasoned Companies. The Underlying Fund can
invest in securities of small, unseasoned companies. These are companies that
have been in operation for less than three years, including the operations of
any predecessors. Securities of these companies may be subject to volatility
in their prices. They may have a limited trading market, which may adversely
affect the Underlying Fund's ability to dispose of them and can reduce the
price the Underlying Fund might be able to obtain for them. Other investors
that own a security issued by a small, unseasoned issuer for which there is
limited liquidity might trade the security when the Underlying Fund is
attempting to dispose of its holdings of that security. In that case the
Underlying Fund might receive a lower price for its holdings than might
otherwise be obtained. The Underlying Fund currently intends to invest no
more than 5% of its net assets in securities of small, unseasoned issuers.

|X| When-Issued and Delayed-Delivery Transactions. The Underlying Fund
can invest in securities on a "when-issued" basis and can purchase or sell
securities on a "delayed-delivery" basis. When-issued and delayed-delivery
are terms that refer to securities whose terms and indenture are available
and for which a market exists, but which are not available for immediate
delivery.

When such transactions are negotiated, the price (which is generally
expressed in yield terms) is fixed at the time the commitment is made.
Delivery and payment for the securities take place at a later date. The
securities are subject to change in value from market fluctuations during the
period until settlement. The value at delivery may be less than the purchase
price. For example, changes in interest rates in a direction other than that
expected by the Manager before settlement will affect the value of such
securities and may cause a loss to the Underlying Fund. During the period
between purchase and settlement, no payment is made by the Underlying Fund to
the issuer and no interest accrues to the Underlying Fund from the investment.

The Underlying Fund will engage in when-issued transactions to secure
what the Manager considers to be an advantageous price and yield at the time
of entering into the obligation. When the Underlying Fund enters into a
when-issued or delayed-delivery transaction, it relies on the other party to
complete the transaction. Its failure to do so may cause the Underlying Fund
to lose the opportunity to obtain the security at a price and yield the
Manager considers to be advantageous.

When the Underlying Fund engages in when-issued and delayed-delivery
transactions, it does so for the purpose of acquiring or selling securities
consistent with its investment objective and policies or for delivery
pursuant to options contracts it has entered into, and not for the purpose of
investment leverage. Although the Underlying Fund will enter into
delayed-delivery or when-issued purchase transactions to acquire securities,
it can dispose of a commitment prior to settlement. If the Underlying Fund
chooses to dispose of the right to acquire a when-issued security prior to
its acquisition or to dispose of its right to delivery or receive against a
forward commitment, it may incur a gain or loss.

At the time the Underlying Fund makes the commitment to purchase or
sell a security on a when-issued or delayed-delivery basis, it records the
transaction on its books and reflects the value of the security purchased in
determining the Underlying Fund's net asset value. In a sale transaction, it
records the proceeds to be received. The Underlying Fund will identify on its
books liquid securities of any type at least equal in value to the value of
the Underlying Fund's purchase commitments until the Underlying Fund pays for
the investment.

When issued and delayed-delivery transactions can be used by the
Underlying Fund as a defensive technique to hedge against anticipated changes
in interest rates and prices. For instance, in periods of rising interest
rates and falling prices, the Underlying Fund might sell securities in its
portfolio on a forward commitment basis to attempt to limit its exposure to
anticipated falling prices. In periods of falling interest rates and rising
prices, the Underlying Fund might sell portfolio securities and purchase the
same or similar securities on a when-issued or delayed-delivery basis to
obtain the benefit of currently higher cash yields.

Investment in Other Investment Companies. The Underlying Fund can also invest
in the securities of other investment companies, which can include open-end
funds, closed-end funds and unit investment trusts, subject to the limits set
forth in the Investment Company Act that apply to those types of investments.
For example, the Underlying Fund can invest in Exchange-Traded Funds, which
are typically open-end funds or unit investment trusts, listed on a stock
exchange. The Underlying Fund might do so as a way of gaining exposure to the
segments of the equity or fixed-income markets represented by the
Exchange-Traded Funds' portfolio, at times when the Underlying Fund may not
be able to buy those portfolio securities directly. As a non-fundamental
policy, the Underlying Fund cannot invest in the securities of other
registered open-end investment companies or registered unit investment trusts
in reliance on sub-paragraph (F) or (G) of section 12(d)(1) of the Investment
Company Act.

Investing in another investment company may involve the payment of
substantial premiums above the value of such investment company's portfolio
securities and is subject to limitations under the Investment Company Act.
The Underlying Fund does not intend to invest in other investment companies
unless the Manager believes that the potential benefits of the investment
justify the payment of any premiums or sales charges. As a shareholder of an
investment company, the Underlying Fund would be subject to its ratable share
of that investment company's expenses, including its advisory and
administration expenses. The Underlying Fund does not anticipate investing a
substantial amount of its net assets in shares of other investment companies.

|X| Repurchase Agreements. The Underlying Fund can acquire securities
subject to repurchase agreements. It may do so for liquidity purposes to meet
anticipated redemptions of Underlying Fund shares, or pending the investment
of the proceeds from sales of Underlying Fund shares, or pending the
settlement of portfolio securities transactions.

In a repurchase transaction, the Underlying Fund buys a security from,
and simultaneously resells it to, an approved vendor for delivery on an
agreed-upon future date. The resale price exceeds the purchase price by an
amount that reflects an agreed-upon interest rate effective for the period
during which the repurchase agreement is in effect. Approved vendors include
U.S. commercial banks, U.S. branches of foreign banks, or broker-dealers that
have been designated as primary dealers in government securities. They must
meet credit requirements set by the Manager from time to time.

The majority of these transactions run from day to day, and delivery
pursuant to the resale typically occurs within one to five days of the
purchase. Repurchase agreements having a maturity beyond seven days are
subject to the Underlying Fund's limits on holding illiquid investments. The
Underlying Fund will not enter into a repurchase agreement having a maturity
beyond seven days that causes more than 10% of its net assets to exceed that
limit. There is no limit on the amount of the Underlying Fund's net assets
that may be subject to repurchase agreements having maturities of seven days
or less.

Repurchase agreements, considered "loans" under the Investment Company
Act, are collateralized by the underlying security. The Underlying Fund's
repurchase agreements require that at all times while the repurchase
agreement is in effect, the value of the collateral must equal or exceed the
repurchase price to fully collateralize the repayment obligation. However, if
the vendor fails to pay the resale price on the delivery date, the Underlying
Fund may incur costs in disposing of the collateral and may experience losses
if there is any delay in its ability to do so. The Manager will monitor the
vendor's creditworthiness to confirm that the vendor is financially sound and
will continuously monitor the collateral's value.

Pursuant to an Exemptive Order issued by the SEC, the Underlying Fund,
along with other affiliated mutual funds managed by the Manager, may transfer
uninvested cash balances into one or more joint repurchase accounts. These
balances are invested in one or more repurchase agreements, secured by U.S.
government securities. Securities that are pledged as collateral for
repurchase agreements are held by a custodian bank until the agreements
mature. Each joint repurchase arrangement requires that the market value of
the collateral be sufficient to cover payments of interest and principal;
however, in the event of default by the other party to the agreement,
retention or sale of the collateral may be subject to legal proceedings.

|X| Illiquid and Restricted Securities. To enable the Underlying Fund
to sell its holdings of a restricted security not registered under the
Securities Act of 1933, the Underlying Fund may have to cause those
securities to be registered. The expenses of registering restricted
securities may be negotiated by the Underlying Fund with the issuer at the
time the Underlying Fund buys the securities. When the Underlying Fund must
arrange registration because the Underlying Fund wishes to sell the security,
a considerable period may elapse between the time the decision is made to
sell the security and the time the security is registered so that the
Underlying Fund could sell it. The Underlying Fund would bear the risks of
any downward price fluctuation during that period.

The Underlying Fund can also acquire restricted securities through
private placements. Those securities have contractual restrictions on their
public resale. Those restrictions might limit the Underlying Fund's ability
to value or to dispose of the securities and might lower the amount the
Underlying Fund could realize upon the sale.

The Underlying Fund has limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those percentage
restrictions do not limit purchases of restricted securities that are
eligible for sale to qualified institutional purchasers under Rule 144A of
the Securities Act of 1933, if those securities have been determined to be
liquid by the Manager under Board-approved guidelines. Those guidelines take
into account the trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Underlying Fund's
holdings of that security may be considered to be illiquid.

Illiquid securities include repurchase agreements maturing in more than
seven days and participation interests that do not have puts exercisable
within seven days.

|X| Loans of Portfolio Securities. The Underlying Fund can lend its
portfolio securities to certain types of eligible borrowers approved by the
Board of Directors. It may do so to try to provide income or to raise cash
for liquidity purposes. These loans are limited to not more than 25% of the
value of the Underlying Fund's net assets. There are some risks in
connection with securities lending. The Underlying Fund might experience a
delay in receiving additional collateral to secure a loan, or a delay in
recovery of the loaned securities. The Fund presently does not intend to
engage in loans of securities in the coming year.

The Underlying Fund must receive collateral for a loan. Under current
applicable regulatory requirements (which are subject to change), on each
business day the loan collateral must be at least equal to the value of the
loaned securities. It must consist of cash, bank letters of credit,
securities of the U.S. government or its agencies or instrumentalities, or
other cash equivalents in which the Underlying Fund is permitted to invest.
To be acceptable as collateral, letters of credit must obligate a bank to pay
amounts demanded by the Underlying Fund if the demand meets the terms of the
letter. The terms of the letter of credit and the issuing bank both must be
satisfactory to the Fund.

When it lends securities, the Underlying Fund receives amounts equal
to the dividends or interest on loaned securities. It also receives one or
more of (a) negotiated loan fees, (b) interest on securities used as
collateral, and (c) interest on any short-term debt securities purchased with
such loan collateral. Either type of interest may be shared with the
borrower. The Underlying Fund can also pay reasonable finder's, custodian
bank and administrative fees in connection with these loans. The terms of
the Underlying Fund's loans must meet applicable tests under the Internal
Revenue Code and must permit the Underlying Fund to reacquire loaned
securities on five days' notice or in time to vote on any important matter.

The Underlying Fund may lend its portfolio securities pursuant to the
Securities Lending Agreement (the "Securities Lending Agreement") with JP
Morgan Chase, subject to the restrictions stated in the Prospectus. The
Underlying Fund will lend such portfolio securities to attempt to increase
the Fund's income. Under the Securities Lending Agreement and applicable
regulatory requirements (which are subject to change), the loan collateral
must, on each business day, be at least equal to the value of the loaned
securities and must consist of cash, bank letters of credit or securities of
the U.S. Government (or its agencies or instrumentalities), or other cash
equivalents in which the Underlying Fund is permitted to invest. To be
acceptable as collateral, letters of credit must obligate a bank to pay to JP
Morgan Chase, as agent, amounts demanded by the Underlying Fund if the demand
meets the terms of the letter. Such terms of the letter of credit and the
issuing bank must be satisfactory to JP Morgan Chase and the Underlying
Fund. The Underlying Fund will receive, pursuant to the Securities Lending
Agreement, 80% of all annual net income (i.e., net of rebates to the
Borrower) from securities lending transactions. JP Morgan Chase has agreed,
in general, to guarantee the obligations of borrowers to return loaned
securities and to be responsible for expenses relating to securities lending.
The Underlying Fund will be responsible, however, for risks associated with
the investment of cash collateral, including the risk that the issuer of the
security in which the cash collateral has been invested defaults. The
Securities Lending Agreement may be terminated by either JP Morgan Chase or
the Fund on 30 days' written notice. The terms of the Underlying Fund's loans
must also meet applicable tests under the Internal Revenue Code and permit
the Underlying Fund to reacquire loaned securities on five business days'
notice or in time to vote on any important matter.

|X| Derivatives. The Underlying Fund can invest in a variety of
derivative investments to seek income or for hedging purposes. Some
derivative investments the Underlying Fund can use are the hedging
instruments described below.

Other derivative investments the Underlying Fund can invest in include
"index-linked" notes. Principal and/or interest payments on these notes
depend on the performance of an underlying index. Currency-indexed securities
are another derivative the Underlying Fund can use. Typically these are
short-term or intermediate-term debt securities. Their value at maturity or
the rates at which they pay income are determined by the change in value of
the U.S. dollar against one or more foreign currencies or an index. In some
cases, these securities may pay an amount at maturity based on a multiple of
the amount of the relative currency movements. This type of index security
offers the potential for increased income or principal payments but at a
greater risk of loss than a typical debt security of the same maturity and
credit quality.

Other derivative investments the Underlying Fund can use include debt
exchangeable for common stock of an issuer or "equity-linked debt securities"
of an issuer. At maturity, the debt security is exchanged for common stock of
the issuer or it is payable in an amount based on the price of the issuer's
common stock at the time of maturity. Both alternatives present a risk that
the amount payable at maturity will be less than the principal amount of the
debt because the price of the issuer's common stock might not be as high as
the Manager expected.

|X| Hedging. The Underlying Fund can use hedging to attempt to protect
against declines in the market value of the Underlying Fund's portfolio, to
permit the Underlying Fund to retain unrealized gains in the value of
portfolio securities which have appreciated, or to facilitate selling
securities for investment reasons. To do so, the Underlying Fund could:
o sell futures contracts,
o buy puts on such futures or on securities, or
o write covered calls on securities or futures. Covered calls can also
be used to increase the Underlying Fund's income, but the Manager
does not expect to engage extensively in that practice.

The Underlying Fund can use hedging to establish a position in the
securities market as a temporary substitute for purchasing particular
securities. In that case, the Underlying Fund would normally seek to purchase
the securities and then terminate that hedging position. The Underlying Fund
might also use this type of hedge to attempt to protect against the
possibility that its portfolio securities would not be fully included in a
rise in value of the market. To do so the Underlying Fund could:
o buy futures, or
o buy calls on such futures or on securities.

The Underlying Fund is not obligated to use hedging instruments, even
though it is permitted to use them in the Manager's discretion, as described
below. The Underlying Fund's strategy of hedging with futures and options on
futures will be incidental to the Underlying Fund's activities in the
underlying cash market. The particular hedging instruments the Underlying
Fund can use are described below. The Underlying Fund can employ new hedging
instruments and strategies when they are developed, if those investment
methods are consistent with the Underlying Fund's investment objective and
are permissible under applicable regulations governing the Underlying Fund.

|_| Futures. The Underlying Fund can buy and sell futures contracts
that relate to (1) broadly-based stock indices ("stock index futures") (2)
debt securities (these are referred to as "interest rate futures"), (3) other
broadly-based securities indices (these are referred to as "financial
futures"), (4) foreign currencies (these are referred to as "forward
contracts"), or (5) commodities (these are referred to as "commodity
futures"), or (6) an individual stock ("single stock futures").

A broadly-based stock index is used as the basis for trading stock
index futures. They may in some cases be based on stocks of issuers in a
particular industry or group of industries. A stock index assigns relative
values to the common stocks included in the index and its value fluctuates in
response to the changes in value of the underlying stocks. A stock index
cannot be purchased or sold directly. Financial futures are similar contracts
based on the future value of the basket of securities that comprise the
index. These contracts obligate the seller to deliver, and the purchaser to
take, cash to settle the futures transaction. There is no delivery made of
the underlying securities to settle the futures obligation. Either party may
also settle the transaction by entering into an offsetting contract.

An interest rate future obligates the seller to deliver (and the
purchaser to take) cash or a specified type of debt security to settle the
futures transaction. Either party could also enter into an offsetting
contract to close out the position.

The Underlying Fund can invest a portion of its assets in commodity
futures contracts. Commodity futures may be based upon commodities within
five main commodity groups: (1) energy, which includes crude oil, natural
gas, gasoline and heating oil; (2) livestock, which includes cattle and hogs;
(3) agriculture, which includes wheat, corn, soybeans, cotton, coffee, sugar
and cocoa; (4) industrial metals, which includes aluminum, copper, lead,
nickel, tin and zinc; and (5) precious metals, which includes gold, platinum
and silver. The Underlying Fund can purchase and sell commodity futures
contracts, options on futures contracts and options and futures on commodity
indices with respect to these five main commodity groups and the individual
commodities within each group, as well as other types of commodities.

A single stock future obligates the seller to deliver (and the
purchaser to take) cash or a specified equity security to settle the futures
transaction. Either party could also enter into an offsetting contract to
close out the position. Single stock futures trade on a very limited number
of exchanges, with contracts typically not fungible among the exchanges.

No money is paid or received by the Underlying Fund on the purchase or
sale of a future. Upon entering into a futures transaction, the Underlying
Fund will be required to deposit an initial margin payment with the futures
commission merchant (the "futures broker"). Initial margin payments will be
deposited with the Underlying Fund's custodian bank in an account registered
in the futures broker's name. However, the futures broker can gain access to
that account only under specified conditions. As the future is marked to
market (that is, its value on the Underlying Fund's books is changed) to
reflect changes in its market value, subsequent margin payments, called
variation margin, will be paid to or by the futures broker daily.

At any time prior to expiration of the future, the Underlying Fund can
elect to close out its position by taking an opposite position, at which time
a final determination of variation margin is made and any additional cash
must be paid by or released to the Underlying Fund. Any loss or gain on the
future is then realized by the Underlying Fund for tax purposes. All futures
transactions, except forward contracts, are effected through a clearinghouse
associated with the exchange on which the contracts are traded.

|_| Put and Call Options. The Underlying Fund can buy and sell certain
kinds of put options ("puts") and call options ("calls"). The Underlying Fund
can buy and sell exchange-traded and over-the-counter put and call options,
including index options, securities options, currency options, commodities
options, and options on the other types of futures described above.

|_| Writing Covered Call Options. The Underlying Fund can write (that
is, sell) covered calls. If the Underlying Fund sells a call option, it must
be covered. That means the Underlying Fund must own the security subject to
the call while the call is outstanding, or, for certain types of calls, the
call can be covered by identifying liquid assets on the Underlying Fund's
books to enable the Underlying Fund to satisfy its obligations if the call is
exercised. Up to 25% of the Underlying Fund's total assets can be subject to
calls the Underlying Fund writes.

When the Underlying Fund writes a call on a security, it receives cash
(a premium). The Underlying Fund agrees to sell the underlying security to a
purchaser of a corresponding call on the same security during the call period
at a fixed exercise price regardless of market price changes during the call
period. The call period is usually not more than nine months. The exercise
price may differ from the market price of the underlying security. The
Underlying Fund has the risk of loss that the price of the underlying
security may decline during the call period. That risk may be offset to some
extent by the premium the Underlying Fund receives. If the value of the
investment does not rise above the call price, it is likely that the call
will lapse without being exercised. In that case the Underlying Fund would
keep the cash premium and the investment.

When the Underlying Fund writes a call on an index, it receives cash (a
premium). If the buyer of the call exercises it, the Underlying Fund will pay
an amount of cash equal to the difference between the closing price of the
call and the exercise price, multiplied by a specified multiple that
determines the total value of the call for each point of difference. If the
value of the underlying investment does not rise above the call price, it is
likely that the call will lapse without being exercised. In that case the
Underlying Fund would keep the cash premium.

The Underlying Fund's custodian bank, or a securities depository acting
for the custodian bank, will act as the Underlying Fund's escrow agent,
through the facilities of the Options Clearing Corporation ("OCC"), as to the
investments on which the Underlying Fund has written calls traded on
exchanges or as to other acceptable escrow securities. In that way, no margin
will be required for such transactions. OCC will release the securities on
the expiration of the option or when the Underlying Fund enters into a
closing transaction.

When the Underlying Fund writes an over-the-counter ("OTC") option, it
will enter into an arrangement with a primary U.S. government securities
dealer which will establish a formula price at which the Underlying Fund will
have the absolute right to repurchase that OTC option. The formula price will
generally be based on a multiple of the premium received for the option, plus
the amount by which the option is exercisable below the market price of the
underlying security (that is, the option is "in the money"). When the
Underlying Fund writes an OTC option, it will treat as illiquid (for purposes
of its restriction on holding illiquid securities) the mark-to-market value
of any OTC option it holds, unless the option is subject to a buy-back
agreement by the executing broker. To terminate its obligation on a call it
has written, the Underlying Fund can purchase a corresponding call in a
"closing purchase transaction." The Underlying Fund will then realize a
profit or loss, depending upon whether the net of the amount of the option
transaction costs and the premium received on the call the Underlying Fund
wrote is more or less than the price of the call the Underlying Fund
purchases to close out the transaction. The Underlying Fund may realize a
profit if the call expires unexercised, because the Underlying Fund will
retain the underlying security and the premium it received when it wrote the
call. Any such profits are considered short-term capital gains for federal
income tax purposes, as are the premiums on lapsed calls. When distributed by
the Underlying Fund they are taxable as ordinary income. If the Underlying
Fund cannot effect a closing purchase transaction due to the lack of a
market, it will have to hold the callable securities until the call expires
or is exercised.

The Underlying Fund can also write calls on a futures contract without
owning the futures contract or securities deliverable under the contract. To
do so, at the time the call is written, the Underlying Fund must cover the
call by identifying an equivalent dollar amount of liquid assets on the
Underlying Fund's books. The Underlying Fund will identify additional liquid
assets on its books if the value of the segregated assets drops below 100% of
the current value of the future. Because of this segregation requirement, in
no circumstances would the Underlying Fund's receipt of an exercise notice as
to that future require the Underlying Fund to deliver a futures contract. It
would simply put the Underlying Fund in a short futures position, which is
permitted by the Underlying Fund's hedging policies.

o Writing Put Options. The Underlying Fund can sell put options. A put
option on securities gives the purchaser the right to sell, and the writer
the obligation to buy, the underlying investment at the exercise price during
the option period. The Underlying Fund will not write puts if, as a result,
more than 25% of the Underlying Fund's total assets would be required to be
segregated to cover such put options.

If the Underlying Fund writes a put, the put must be covered by liquid
assets identified on the Underlying Fund's books. The premium the Underlying
Fund receives from writing a put represents a profit, as long as the price of
the underlying investment remains equal to or above the exercise price of the
put. However, the Underlying Fund also assumes the obligation during the
option period to buy the underlying investment from the buyer of the put at
the exercise price, even if the value of the investment falls below the
exercise price. If a put the Underlying Fund has written expires unexercised,
the Underlying Fund realizes a gain in the amount of the premium less the
transaction costs incurred. If the put is exercised, the Underlying Fund must
fulfill its obligation to purchase the underlying investment at the exercise
price. That price will usually exceed the market value of the investment at
that time. In that case, the Underlying Fund may incur a loss if it sells the
underlying investment. That loss will be equal to the sum of the sale price
of the underlying investment and the premium received minus the sum of the
exercise price and any transaction costs the Underlying Fund incurred.

When writing a put option on a security, to secure its obligation to
pay for the underlying security the Underlying Fund will deposit in escrow
liquid assets with a value equal to or greater than the exercise price of the
underlying securities. The Underlying Fund therefore forgoes the opportunity
of investing the segregated assets or writing calls against those assets.

As long as the Underlying Fund's obligation as the put writer
continues, it may be assigned an exercise notice by the broker-dealer through
which the put was sold. That notice will require the Underlying Fund to take
delivery of the underlying security and pay the exercise price. The
Underlying Fund has no control over when it may be required to purchase the
underlying security, since it may be assigned an exercise notice at any time
prior to the termination of its obligation as the writer of the put. That
obligation terminates upon expiration of the put. It may also terminate if,
before it receives an exercise notice, the Underlying Fund effects a closing
purchase transaction by purchasing a put of the same series as it sold. Once
the Underlying Fund has been assigned an exercise notice, it cannot effect a
closing purchase transaction.

The Underlying Fund can decide to effect a closing purchase transaction
to realize a profit on an outstanding put option it has written or to prevent
the underlying security from being put. Effecting a closing purchase
transaction will also permit the Underlying Fund to write another put option
on the security, or to sell the security and use the proceeds from the sale
for other investments. The Underlying Fund will realize a profit or loss from
a closing purchase transaction depending on whether the cost of the
transaction is less or more than the premium received from writing the put
option. Any profits from writing puts are considered short-term capital gains
for federal tax purposes, and when distributed by the Underlying Fund, are
taxable as ordinary income.

o Purchasing Calls and Puts. The Underlying Fund can purchase calls to
protect against the possibility that the Underlying Fund's portfolio will not
participate in an anticipated rise in the securities market. When the
Underlying Fund buys a call (other than in a closing purchase transaction),
it pays a premium. The Underlying Fund then has the right to buy the
underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price. The Underlying
Fund benefits only if it sells the call at a profit or if, during the call
period, the market price of the underlying investment is above the sum of the
call price plus the transaction costs and the premium paid for the call and
the Underlying Fund exercises the call. If the Underlying Fund does not
exercise the call or sell it (whether or not at a profit), the call will
become worthless at its expiration date. In that case the Underlying Fund
will have paid the premium but lost the right to purchase the underlying
investment.

The Underlying Fund can buy puts whether or not it holds the underlying
investment in its portfolio. When the Underlying Fund purchases a put, it
pays a premium and, except as to puts on indices, has the right to sell the
underlying investment to a seller of a put on a corresponding investment
during the put period at a fixed exercise price. Buying a put on securities
or futures the Underlying Fund owns enables the Underlying Fund to attempt to
protect itself during the put period against a decline in the value of the
underlying investment below the exercise price by selling the underlying
investment at the exercise price to a seller of a corresponding put. If the
market price of the underlying investment is equal to or above the exercise
price and, as a result, the put is not exercised or resold, the put will
become worthless at its expiration date. In that case the Underlying Fund
will have paid the premium but lost the right to sell the underlying
investment. However, the Underlying Fund can sell the put prior to its
expiration. That sale may or may not be at a profit.

Buying a put on an investment the Underlying Fund does not own (such as
an index or future) permits the Underlying Fund to resell the put or to buy
the underlying investment and sell it at the exercise price. The resale price
will vary inversely to the price of the underlying investment. If the market
price of the underlying investment is above the exercise price and, as a
result, the put is not exercised, the put will become worthless on its
expiration date.

When the Underlying Fund purchases a call or put on an index or future,
it pays a premium, but settlement is in cash rather than by delivery of the
underlying investment to the Underlying Fund. Gain or loss depends on changes
in the index in question (and thus on price movements in the securities
market generally) rather than on price movements in individual securities or
futures contracts.

The Underlying Fund can buy a call or put only if, after the purchase,
the value of all call and put options held by the Underlying Fund will not
exceed 5% of the Underlying Fund's total assets.

|_| Buying and Selling Options on Foreign Currencies. The Underlying
Fund can buy and sell calls and puts on foreign currencies. They include puts
and calls that trade on a securities or commodities exchange or in the
over-the-counter markets or are quoted by major recognized dealers in such
options. The Underlying Fund could use these calls and puts to try to protect
against declines in the dollar value of foreign securities and increases in
the dollar cost of foreign securities the Underlying Fund wants to acquire.

If the Manager anticipates a rise in the dollar value of a foreign
currency in which securities to be acquired are denominated, the increased
cost of those securities may be partially offset by purchasing calls or
writing puts on that foreign currency. If the Manager anticipates a decline
in the dollar value of a foreign currency, the decline in the dollar value of
portfolio securities denominated in that currency might be partially offset
by writing calls or purchasing puts on that foreign currency. However, the
currency rates could fluctuate in a direction adverse to the Underlying
Fund's position. The Underlying Fund will then have incurred option premium
payments and transaction costs without a corresponding benefit.

A call the Underlying Fund writes on a foreign currency is "covered" if
the Underlying Fund owns the underlying foreign currency covered by the call
or has an absolute and immediate right to acquire that foreign currency
without additional cash consideration (or it can do so for additional cash
consideration held in a segregated account by its custodian bank) upon
conversion or exchange of other foreign currency held in its portfolio.

The Underlying Fund could write a call on a foreign currency to provide
a hedge against a decline in the U.S. dollar value of a security which the
Underlying Fund owns or has the right to acquire and which is denominated in
the currency underlying the option. That decline might be one that occurs due
to an expected adverse change in the exchange rate. This is known as a
"cross-hedging" strategy. In those circumstances, the Underlying Fund covers
the option by maintaining cash, U.S. government securities or other liquid,
high-grade debt securities in an amount equal to the exercise price of the
option, in a segregated account with the Underlying Fund's custodian bank.

|_| Risks of Hedging with Options and Futures. The use of hedging
instruments requires special skills and knowledge of investment techniques
that are different than what is required for normal portfolio management. If
the Manager uses a hedging instrument at the wrong time or judges market
conditions incorrectly, hedging strategies may reduce the Underlying Fund's
return. The Underlying Fund could also experience losses if the prices of its
futures and options positions were not correlated with its other investments.

The Underlying Fund's option activities could affect its portfolio
turnover rate and brokerage commissions. The exercise of calls written by the
Underlying Fund might cause the Underlying Fund to sell related portfolio
securities, thus increasing its turnover rate. The exercise by the Underlying
Fund of puts on securities will cause the sale of underlying investments,
increasing portfolio turnover. Although the decision whether to exercise a
put it holds is within the Underlying Fund's control, holding a put might
cause the Underlying Fund to sell the related investments for reasons that
would not exist in the absence of the put.

The Underlying Fund could pay a brokerage commission each time it buys
a call or put, sells a call or put, or buys or sells an underlying investment
in connection with the exercise of a call or put. Those commissions could be
higher on a relative basis than the commissions for direct purchases or sales
of the underlying investments. Premiums paid for options are small in
relation to the market value of the underlying investments. Consequently, put
and call options offer large amounts of leverage. The leverage offered by
trading in options could result in the Underlying Fund's net asset value
being more sensitive to changes in the value of the underlying investment.

If a covered call written by the Underlying Fund is exercised on an
investment that has increased in value, the Underlying Fund will be required
to sell the investment at the call price. It will not be able to realize any
profit if the investment has increased in value above the call price.

An option position may be closed out only on a market that provides
secondary trading for options of the same series, and there is no assurance
that a liquid secondary market will exist for any particular option. The
Underlying Fund might experience losses if it could not close out a position
because of an illiquid market for the future or option.

There is a risk in using short hedging by selling futures or purchasing
puts on broadly-based indices or futures to attempt to protect against
declines in the value of the Underlying Fund's portfolio securities. The risk
is that the prices of the futures or the applicable index will correlate
imperfectly with the behavior of the cash prices of the Underlying Fund's
securities. For example, it is possible that while the Underlying Fund has
used hedging instruments in a short hedge, the market might advance and the
value of the securities held in the Underlying Fund's portfolio might
decline. If that occurred, the Underlying Fund would lose money on the
hedging instruments and also experience a decline in the value of its
portfolio securities. However, while this could occur for a very brief period
or to a very small degree, over time the value of a diversified portfolio of
securities will tend to move in the same direction as the indices upon which
the hedging instruments are based.

The risk of imperfect correlation increases as the composition of the
Underlying Fund's portfolio diverges from the securities included in the
applicable index. To compensate for the imperfect correlation of movements in
the price of the portfolio securities being hedged and movements in the price
of the hedging instruments, the Underlying Fund might use hedging instruments
in a greater dollar amount than the dollar amount of portfolio securities
being hedged. It might do so if the historical volatility of the prices of
the portfolio securities being hedged is more than the historical volatility
of the applicable index.

The ordinary spreads between prices in the cash and futures markets are
subject to distortions, due to differences in the nature of those markets.
First, all participants in the futures market are subject to margin deposit
and maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or
taking delivery. To the extent participants decide to make or take delivery,
liquidity in the futures market could be reduced, thus producing distortion.
Third, from the point of view of speculators, the deposit requirements in the
futures market are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the futures
market may cause temporary price distortions.

The Underlying Fund can use hedging instruments to establish a position
in the securities markets as a temporary substitute for the purchase of
individual securities (long hedging) by buying futures and/or calls on such
futures, broadly-based indices or on securities. It is possible that when the
Underlying Fund does so the market might decline. If the Underlying Fund then
concludes not to invest in securities because of concerns that the market
might decline further or for other reasons, the Underlying Fund will realize
a loss on the hedging instruments that is not offset by a reduction in the
price of the securities purchased.

|_| Forward Contracts. Forward contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future delivery
at a fixed price. The Underlying Fund uses them to "lock in" the U.S. dollar
price of a security denominated in a foreign currency that the Underlying
Fund has bought or sold, or to protect against possible losses from changes
in the relative values of the U.S. dollar and a foreign currency. The
Underlying Fund limits its exposure in foreign currency exchange contracts in
a particular foreign currency to the amount of its assets denominated in that
currency or a closely-correlated currency. The Underlying Fund can also use
"cross-hedging" where the Underlying Fund hedges against changes in
currencies other than the currency in which a security it holds is
denominated.

Under a forward contract, one party agrees to purchase, and another
party agrees to sell, a specific currency at a future date. That date may be
any fixed number of days from the date of the contract agreed upon by the
parties. The transaction price is set at the time the contract is entered
into. These contracts are traded in the inter-bank market conducted directly
among currency traders (usually large commercial banks) and their customers.

The Underlying Fund can use forward contracts to protect against
uncertainty in the level of future exchange rates. The use of forward
contracts does not eliminate the risk of fluctuations in the prices of the
underlying securities the Underlying Fund owns or intends to acquire, but it
does fix a rate of exchange in advance. Although forward contracts may reduce
the risk of loss from a decline in the value of the hedged currency, at the
same time they limit any potential gain if the value of the hedged currency
increases.

When the Underlying Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, or when it anticipates
receiving dividend payments in a foreign currency, the Underlying Fund might
desire to "lock-in" the U.S. dollar price of the security or the U.S. dollar
equivalent of the dividend payments. To do so, the Underlying Fund might
enter into a forward contract for the purchase or sale of the amount of
foreign currency involved in the underlying transaction, in a fixed amount of
U.S. dollars per unit of the foreign currency. This is called a "transaction
hedge." The transaction hedge will protect the Underlying Fund against a loss
from an adverse change in the currency exchange rates during the period
between the date on which the security is purchased or sold or on which the
payment is declared, and the date on which the payments are made or received.

The Underlying Fund could also use forward contracts to lock in the
U.S. dollar value of portfolio positions. This is called a "position hedge."
When the Underlying Fund believes that foreign currency might suffer a
substantial decline against the U.S. dollar, it could enter into a forward
contract to sell an amount of that foreign currency approximating the value
of some or all of the Underlying Fund's portfolio securities denominated in
that foreign currency. When the Underlying Fund believes that the U.S. dollar
may suffer a substantial decline against a foreign currency, it could enter
into a forward contract to buy that foreign currency for a fixed dollar
amount. Alternatively, the Underlying Fund could enter into a forward
contract to sell a different foreign currency for a fixed U.S. dollar amount
if the Underlying Fund believes that the U.S. dollar value of the foreign
currency to be sold pursuant to its forward contract will fall whenever there
is a decline in the U.S. dollar value of the currency in which portfolio
securities of the Underlying Fund are denominated. That is referred to as a
"cross hedge."

The Underlying Fund will cover its short positions in these cases by
identifying to its custodian bank assets having a value equal to the
aggregate amount of the Underlying Fund's commitment under forward contracts.
The Underlying Fund will not enter into forward contracts or maintain a net
exposure to such contracts if the consummation of the contracts would
obligate the Underlying Fund to deliver an amount of foreign currency in
excess of the value of the Underlying Fund's portfolio securities or other
assets denominated in that currency or another currency that is the subject
of the hedge. However, to avoid excess transactions and transaction costs,
the Underlying Fund can maintain a net exposure to forward contracts in
excess of the value of the Underlying Fund's portfolio securities or other
assets denominated in foreign currencies if the excess amount is "covered" by
liquid securities denominated in any currency. The cover must be at least
equal at all times to the amount of that excess. As one alternative, the
Underlying Fund can purchase a call option permitting the Underlying Fund to
purchase the amount of foreign currency being hedged by a forward sale
contract at a price no higher than the forward contract price. As another
alternative, the Underlying Fund can purchase a put option permitting the
Underlying Fund to sell the amount of foreign currency subject to a forward
purchase contract at a price as high or higher than the forward contact
price.

The precise matching of the amounts under forward contracts and the
value of the securities involved generally will not be possible because the
future value of securities denominated in foreign currencies will change as a
consequence of market movements between the date the forward contract is
entered into and the date it is sold. In some cases the Manager might decide
to sell the security and deliver foreign currency to settle the original
purchase obligation. If the market value of the security is less than the
amount of foreign currency the Underlying Fund is obligated to deliver, the
Underlying Fund might have to purchase additional foreign currency on the
"spot" (that is, cash) market to settle the security trade. If the market
value of the security instead exceeds the amount of foreign currency the
Underlying Fund is obligated to deliver to settle the trade, the Underlying
Fund might have to sell on the spot market some of the foreign currency
received upon the sale of the security. There will be additional transaction
costs on the spot market in those cases.

The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing the Underlying
Fund to sustain losses on these contracts and to pay additional transactions
costs. The use of forward contracts in this manner might reduce the
Underlying Fund's performance if there are unanticipated changes in currency
prices to a greater degree than if the Underlying Fund had not entered into
such contracts.

At or before the maturity of a forward contract requiring the
Underlying Fund to sell a currency, the Underlying Fund might sell a
portfolio security and use the sale proceeds to make delivery of the
currency. In the alternative the Underlying Fund might retain the security
and offset its contractual obligation to deliver the currency by purchasing a
second contract. Under that contract the Underlying Fund will obtain, on the
same maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Underlying Fund might close out a forward contract
requiring it to purchase a specified currency by entering into a second
contract entitling it to sell the same amount of the same currency on the
maturity date of the first contract. The Underlying Fund would realize a gain
or loss as a result of entering into such an offsetting forward contract
under either circumstance. The gain or loss will depend on the extent to
which the exchange rate or rates between the currencies involved moved
between the execution dates of the first contract and offsetting contract.

The costs to the Underlying Fund of engaging in forward contracts
varies with factors such as the currencies involved, the length of the
contract period and the market conditions then prevailing. Because forward
contracts are usually entered into on a principal basis, no brokerage fees or
commissions are involved. Because these contracts are not traded on an
exchange, the Underlying Fund must evaluate the credit and performance risk
of the counterparty under each forward contract.

Although the Underlying Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign currencies
into U.S. dollars on a daily basis. The Underlying Fund can convert foreign
currency from time to time, and will incur costs in doing so. Foreign
exchange dealers do not charge a fee for conversion, but they do seek to
realize a profit based on the difference between the prices at which they buy
and sell various currencies. Thus, a dealer might offer to sell a foreign
currency to the Underlying Fund at one rate, while offering a lesser rate of
exchange if the Underlying Fund desires to resell that currency to the
dealer.

|_| Interest Rate Swap Transactions. The Underlying Fund can enter into
interest rate swap agreements. In an interest rate swap, the Underlying Fund
and another party exchange their right to receive or their obligation to pay
interest on a security. For example, they might swap the right to receive
floating rate payments for fixed rate payments. The Underlying Fund can enter
into swaps only on securities that it owns. The Underlying Fund will not
enter into swaps with respect to more than 25% of its total assets. Also, the
Underlying Fund will identify liquid assets on its books (such as cash or
U.S. government securities) to cover any amounts it could owe under swaps
that exceed the amounts it is entitled to receive, and it will adjust that
amount daily, as needed.

Swap agreements entail both interest rate risk and credit risk. There
is a risk that, based on movements of interest rates in the future, the
payments made by the Underlying Fund under a swap agreement will be greater
than the payments it received. Credit risk arises from the possibility that
the counterparty will default. If the counterparty defaults, the Underlying
Fund's loss will consist of the net amount of contractual interest payments
that the Underlying Fund has not yet received. The Manager will monitor the
creditworthiness of counterparties to the Underlying Fund's interest rate
swap transactions on an ongoing basis.

The Underlying Fund can enter into swap transactions with certain
counterparties pursuant to master netting agreements. A master netting
agreement provides that all swaps done between the Underlying Fund and that
counterparty shall be regarded as parts of an integral agreement. If amounts
are payable on a particular date in the same currency in respect of one or
more swap transactions, the amount payable on that date in that currency
shall be the net amount. In addition, the master netting agreement may
provide that if one party defaults generally or on one swap, the counterparty
can terminate all of the swaps with that party. Under these agreements, if a
default results in a loss to one party, the measure of that party's damages
is calculated by reference to the average cost of a replacement swap for each
swap. It is measured by the mark-to-market value at the time of the
termination of each swap. The gains and losses on all swaps are then netted,
and the result is the counterparty's gain or loss on termination. The
termination of all swaps and the netting of gains and losses on termination
is generally referred to as "aggregation."

|_| Regulatory Aspects of Hedging Instruments. The Commodities Futures
Trading Commission (the "CFTC") recently eliminated limitations on futures
trading by certain regulated entities including registered investment
companies. Consequently, registered investment companies may engage in
unlimited futures transactions and options thereon provided that the Fund
claims an exclusion from regulation as a commodity pool operator. The Fund
has claimed such an exclusion from registration as a commodity pool operator
under the Commodity Exchange Act ("CEA"). The Fund may use futures and
options for hedging and non-hedging purposes to the extent consistent with
its investment objective, internal risk management guidelines adopted by the
Fund's investment advisor (as they may be amended from time to time), and as
otherwise set forth in the Fund's prospectus or this Statement of Additional
Information.

Transactions in options by the Underlying Fund are subject to
limitations established by the option exchanges. The exchanges limit the
maximum number of options that may be written or held by a single investor or
group of investors acting in concert. Those limits apply regardless of
whether the options were written or purchased on the same or different
exchanges or are held in one or more accounts or through one or more
different exchanges or through one or more brokers. Thus, the number of
options that the Underlying Fund can write or hold may be affected by options
written or held by other entities, including other investment companies
having the same advisor as the Underlying Fund (or an advisor that is an
affiliate of the Underlying Fund's advisor). The exchanges also impose
position limits on futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions.

Under the Investment Company Act, when the Underlying Fund purchases a
future, it must maintain cash or readily marketable short-term debt
instruments in an amount equal to the market value of the securities
underlying the future, less the margin deposit applicable to it.

|_| Tax Aspects of Certain Hedging Instruments. Certain foreign
currency exchange contracts in which the Underlying Fund can invest are
treated as "Section 1256 contracts" under the Internal Revenue Code. In
general, gains or losses relating to Section 1256 contracts are characterized
as 60% long-term and 40% short-term capital gains or losses under the Code.
However, foreign currency gains or losses arising from Section 1256 contracts
that are forward contracts generally are treated as ordinary income or loss.
In addition, Section 1256 contracts held by the Underlying Fund at the end of
each taxable year are "marked-to-market," and unrealized gains or losses are
treated as though they were realized. These contracts also may be
marked-to-market for purposes of determining the excise tax applicable to
investment company distributions and for other purposes under rules
prescribed pursuant to the Internal Revenue Code. An election can be made by
the Underlying Fund to exempt those transactions from this marked-to-market
treatment.

Certain forward contracts the Underlying Fund enters into may result in
"straddles" for federal income tax purposes. The straddle rules may affect
the character and timing of gains (or losses) recognized by the Underlying
Fund on straddle positions. Generally, a loss sustained on the disposition of
a position making up a straddle is allowed only to the extent that the loss
exceeds any unrecognized gain in the offsetting positions making up the
straddle. Disallowed loss is generally allowed at the point where there is no
unrecognized gain in the offsetting positions making up the straddle, or the
offsetting position is disposed of.

Under the Internal Revenue Code, the following gains or losses are
treated as ordinary income or loss:
(1) gains or losses attributable to fluctuations in exchange rates that
occur between the time the Underlying Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in
a foreign currency and the time the Underlying Fund actually
collects such receivables or pays such liabilities, and
(2) gains or losses attributable to fluctuations in the value of a foreign
currency between the date of acquisition of a debt security
denominated in a foreign currency or foreign currency forward
contracts and the date of disposition.

Currency gains and losses are offset against market gains and losses on
each trade before determining a net "Section 988" gain or loss under the
Internal Revenue Code for that trade, which may increase or decrease the
amount of the Underlying Fund's investment income available for distribution
to its shareholders.

|X| Temporary Defensive and Interim Investments. The Underlying Fund's
temporary defensive investments can include (i) obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities; (ii)
commercial paper rated in the highest category by an established rating
organization; (iii) certificates of deposit or bankers' acceptances of
domestic banks with assets of $1 billion or more; (iv) any of the foregoing
securities that mature in one year or less (generally known as "cash
equivalents"); (v) other short-term corporate debt obligations; and (vi)
repurchase agreements.

Investment Restrictions

|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Underlying Fund has adopted to govern its investments that
can be changed only by the vote of a "majority" of the Underlying Fund's
outstanding voting securities. Under the Investment Company Act, a "majority"
vote is defined as the vote of the holders of the lesser of:
o 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or
o more than 50% of the outstanding shares.

The Underlying Fund's investment objective is a fundamental policy.
Other policies described in the Underlying Fund's Prospectus or its Statement
of Additional Information and in this Appendix C are "fundamental" only if
they are identified as such. The Underlying Fund's Board of Directors can
change non-fundamental policies without shareholder approval. However,
significant changes to investment policies will be described in supplements
or updates to the Underlying Fund's Prospectus or Statement of Additional
Information, as appropriate. The Underlying Fund's most significant
investment policies are described in its Prospectus as well as in the
Oppenheimer Principal Protected Main Street Fund II Prospectus.

|X| Does the Underlying Fund Have Additional Fundamental Policies? The
following investment restrictions are Fundamental policies of the Underlying
Fund.

o The Underlying Fund cannot make loans except (a) through lending of
securities, (b) through the purchase of debt instruments or similar evidences
of indebtedness, (c) through an interfund lending program with other
affiliated funds, and (d) through repurchase agreements

Unless the Underlying Fund's Prospectus or Statement of Additional
Information state that a percentage restriction applies on an ongoing basis,
it applies only at the time the Underlying Fund makes an investment (except
in the case of borrowing and investments in illiquid securities). The
Underlying Fund need not sell securities to meet the percentage limits if the
value of the investment increases in proportion to the size of the Underlying
Fund.

For purposes of the Underlying Fund's policy not to concentrate its
investments as described above, the Underlying Fund has adopted the industry
classifications set forth in Appendix B to this Statement of Additional
Information. This is not a fundamental policy.

Oppenheimer Principal Protected Main Street Fund II(R)

Internet Website:
www.oppenheimerfunds.com

Investment Adviser
OppenheimerFunds, Inc.
Two World Financial Center
225 Liberty Street, 11th Floor
New York, New York 10281-1008

Distributor
OppenheimerFunds Distributor, Inc.
Two World Financial Center
225 Liberty Street, 11th Floor
New York, New York 10281-1008

Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1.800.CALL.OPP (225.5677)

Custodian Bank
JPMorgan Chase Bank
4 Chase MetroTech Center
Brooklyn, New York 11245

Independent Registered Public Accounting Firm
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202

Counsel to the Fund
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway, Suite 1480
Denver, CO 80202

Counsel to the Independent Trustees
Bell, Boyd & Lloyd LLC
70 West Madison Street, Suite 3100
Chicago, Illinois 60602
1234
PX0711.001.1206

(1) In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Trustees" in this Statement of Additional Information refers to
those Trustees who are not "interested persons" of the Fund and who do not
have any direct or indirect financial interest in the operation of the
distribution plan or any agreement under the plan.
(1) Certain waivers also apply to Class M shares of Oppenheimer Convertible
Securities Fund.
(2) In the case of Oppenheimer Senior Floating Rate Fund, a
continuously-offered closed-end fund, references to contingent deferred sales
charges mean the Fund's Early Withdrawal Charges and references to
"redemptions" mean "repurchases" of shares.
(3) An "employee benefit plan" means any plan or arrangement, whether or not
it is "qualified" under the Internal Revenue Code, under which Class N shares
of an Oppenheimer fund or funds are purchased by a fiduciary or other
administrator for the account of participants who are employees of a single
employer or of affiliated employers. These may include, for example, medical
savings accounts, payroll deduction plans or similar plans. The fund accounts
must be registered in the name of the fiduciary or administrator purchasing
the shares for the benefit of participants in the plan.
(4) The term "Group Retirement Plan" means any qualified or non-qualified
retirement plan for employees of a corporation or sole proprietorship,
members and employees of a partnership or association or other organized
group of persons (the members of which may include other groups), if the
group has made special arrangements with the Distributor and all members of
the group participating in (or who are eligible to participate in) the plan
purchase shares of an Oppenheimer fund or funds through a single investment
dealer, broker or other financial institution designated by the group. Such
plans include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and 403(b) plans
other than plans for public school employees. The term "Group Retirement
Plan" also includes qualified retirement plans and non-qualified deferred
compensation plans and IRAs that purchase shares of an Oppenheimer fund or
funds through a single investment dealer, broker or other financial
institution that has made special arrangements with the Distributor.
(5) However, that concession will not be paid on purchases of shares in
amounts of $1 million or more (including any right of accumulation) by a
Retirement Plan that pays for the purchase with the redemption proceeds of
Class C shares of one or more Oppenheimer funds held by the Plan for more
than one year.
(6) This provision does not apply to IRAs.
(7) This provision only applies to qualified retirement plans and 403(b)(7)
custodial plans after your separation from service in or after the year you
reached age 55.
(8) The distribution must be requested prior to Plan termination or the
elimination of the Oppenheimer funds as an investment option under the Plan.
(9) This provision does not apply to IRAs.
(10) This provision does not apply to loans from 403(b)(7) custodial plans
and loans from the OppenheimerFunds-sponsored Single K retirement plan.
(11) This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.